Tuesday, May 17, 2016

Corporate Bond Market

US Equity Futures are lower to start the session with the DJ Futures -17 and the S&P Futures -2. The global tone is mixed as European markets show strength through the overnight while Asian equities are mixed. Oil is up to $47.86 and rates are weaker with the 10yr Treasury last quoted at 1.77%. Credit is wider with the Invest Grade Index showing at 81.5/82.3 and cash also weaker.

In credit news, expect another big day in new issuance. Dell will distribute its 8-part deal to finance their acquisition of EMC Corp at some point today. The deal is aimed to raise $16-20bn and the total acquisition is said to exceed $60bn. Yesterday’s primary market saw $7.275bn priced in IG Credit $1bn in HY Credit. May’s monthly volume of new issues has totaled $92.06bn in IG and $11.64bn in the HY space.

In the news, Home Depot reported Q1 profit that beat Wall Street’s estimates. This positive indicator numbers give retail hope as the rest of the sector has had a miserable start to 2016.

In economic data, the US National Association of Home Builders Market will be releasing April’s numbers for new privately owned housing units starts and permits. Later on, the monthly CPI change will be reported. Also, the Fed will be announcing April’s National Industrial Production totals.

Municipal Bond Market 

Munis were unchanged to start the week as the market prepares for about $11bln in issuance. We saw light demand in the secondary across most debt sectors and states.  There was select demand in spots for states with light issuance this week such as the state of NJ.    The market will be focused on the primary today as we begin order periods for some of the week’s larger deals and a variety of micro deals under $100mn start to price.  Pricing scales already look extremely aggressive compared to where we saw comparable names come last week. 30 day supply is unchanged this morning with $17bn on tap over the next 30 days versus $17bn Monday.
PR trading remains light as the market awaits more news out of the island.  We continue to see very little trading across all debt classes.  Benchmark 8s traded up about a point Monday with bonds trading @ $64.50 (11.91%), after trading around $63.50 last week.   

30 Day visible supply: $17bln