Monday, April 25, 2016

Corporate Bond Market
US Equity Futures are down to start the week with the DJ Futures -34 and the S&P Futures -4.5 this morning. Overseas equities are mixed through the overnight with European markets down and Asian markets up. Oil is up to $43.85 this morning and rates are stronger with the 10yr Treasury last at 1.85%. Credit continues to feel firm with the Invest Grade Index slightly higher at 73.5/74.5 this morning while cash is a bit lower.

In credit news, spreads moved tighter in secondary trading on Friday with a Trace count of $13.8bn vs $18.9bn Thursday. This week is anticipated to have $15-20bn priced in IG new issuance with three Yankee deals already set to price today: Abu Dhabi, Sinope, and Ziraat Bank. In HY, last week was noted as the busiest issuance ytd with 6 deals priced for $10.065bn.

In the news, the Fed officials expect two rate increases in later in the year as the ECB focus is on implementing existing stimulus. The Nabors will be announcing earnings after market close this afternoon.

In economic data, the US will be announcing the tally of new home sales for March. Following, the Dallas Fed will be speaking on the manufacturing outlook level of general business activity.

 

Municipal Bond Market
Munis faced pressure to close out the week with aggressive selling across the curve.  The majority of market participants seemed hesitant to participate in the secondary with $8bn in new issuance scheduled for the week ahead.  The largest deal of the week will be about $2bn from Ascension health; other highlights include $883mln from Loma Linda University Med Center, and $350mln from Miami Dade County.  Funds continue to face inflows with $555mln in new cash flowing in this past week.  New cash continues to get put to work in the primary which should continue this week with such a variety of issuers.  30 day supply is stronger this morning with $12.3bn scheduled over the next 30 days versus $11bn on Friday.

We continue to see light demand in PR paper and are finally seeing a little bit of a pull back in Children’s tobacco bonds.  Originally we saw two large accounts buying after the news; however, they have pulled back a little here which has allowed to the bid side to fade down around $99.00.  PR 8’s of 2035 continue to stabilize in the mid $60s with bonds trading @ $67.00 (12.59%) Friday.

30-Day visible supply: $12.9bn

 

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