Wednesday, May 11, 2016

Corporate Bond Market

US Equity Futures are down to start the session with the DJ Futures -41 and the S&P Futures -3 in early trading. Overseas equities are mixed through the overnight with European markets down and Asian markets up. Oil is slightly lower at $44.51 and rates are unchanged with the 10yr Treasury last quoted at 1.76%. Credit is feels firm with the Invest Grade Index weaker at 80.7/81.3 and cash is also lower.

In credit news, today will be another big day in new issuance. Yesterday’s primary market saw $9.975bn priced in IG Credit $900mn in HY Credit. Of the new issues, we are active in: Kraft-Heinz, Goodyear, and Citizens Bank. The weekly total has brought $35.575bn in IG which is in line with the projected $50bn estimated for the week. There are many deals already set to price today with a possibility of more to come. Those worth mentioning are: Starbucks, Boardwalk Pipelines, Suntrust, and JPM.   

In economic data, the MBA announced that the US Mortgage Applications have increased .4% over the past week. Later today, the US Treasury Federal Budget Debt Summary Deficit or Surplus NSA will be released.

Municipal Bond Market   

Munis are unchanged this morning after a mixed trading day.  We saw demand in early trading Tuesday; however the market took its foot off the gas in the afternoon as smaller deals began to price. Today’s focus will be the on the primary with pricing of two of the weeks most anticipated deals.  Alameda County Transportation Authority and the Chicago Water Authority will come to market with over $1bln in debt.  Yieldy deals have fared much better than higher grade names over the past few weeks and we expect to see that continue with the pricing of these two names. 30 day supply is weaker this morning with $12bln on tap over the next 30 days versus $14bln Tuesday.

PR trading remained light Tuesday as we approach July payments.  We have started to see an increase in insured paper out for bid which the market has been able to absorb reasonably well.  Liquidity remains an issue in the non insured sector with the majority of market participants full on most names.  .  Benchmark GOs continue to trade in the low $60s with bonds trading @ $63.25 on Tuesday.

30 Day visible supply: $12bln