Tuesday, February 23, 2016

Corporate Bond Market
US equity futures are opening unchanged to down slightly, as global equities were off a touch overnight (Dow Futures -19, S&P Futures -4).  Oil is trading up at $33.11, and US Treasuries are selling off with the 10yr last at 1.776%.  Credit is unchanged to slightly tighter.  The Investment Grade Index is -.5 at 112.5/113.  Cash spreads are marginally better with secondary trading dominated by clean up trades around yesterday’s new issues.

The Primary Market was very active yesterday with $18bn pricing across a number of different names.  Most deals came at a decent concession to the outstandings and performed well.  The MMP 10yr was particularly well received , trading almost 20bps tighter.   The only laggard seemed to be the UNHthree-tranche transaction that is hovering around issue bid.   In the preferred market there was an interesting transaction from EBAY.  They priced a 6%, $25 par, 40nc5 deal that is trading around par.  It looks set to be another busy day with a large deal from MUFG already announced and hearing at least two more to come.

In market moving news, BHP cut their dividend in attempt to deal with commodity price pressure.

In economic news, Consumer Confidence Index (10:00am), Richmond Fed Manufact. Index (10:00am), and Existing Home Sales (10:00am) are due to be released today.  There is a 2yr Treasury auction today.



Municipal Bond Market
Munis continue to look to Treasuries for direction with weaker trading across the curve.  It was an extremely slow start to the week with the majority of accounts out of the office for a conference.  The focus today will be on the primary market as we continue to find better opportunities there than in the secondary.  Highlights of today’s calendar include $750mln NY City GOs, $401mln University of North Carolina, and $169mln from University of Arizona.  30-day supply is stronger this morning with $9.07bn scheduled over the next 30 days versus $9bn Monday.

PR trading nonexistent on Monday as the market awaits more color out of the commonwealth.  PR benchmark 8’s traded @ $70.375 (11.95%) after dipping into the high $60’s last week. 

30-Day visible supply: $9.0bn


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