Wednesday, May 18, 2016

Corporate Bond Market

US Equity Futures are weak for the second straight day with the DJ Futures -53 and the S&P Futures -6. Overseas equities are mixed in both European and Asian markets. Oil is down, showing at $48.22 per barrel this morning and rates are also weaker with the 10yr Treasury last quoted at 1.79%. Credit is wider with the Invest Grade Index showing a bit weaker at 83/83.5 and cash is also weaker.

In credit news, expect another heavy day in new issuance. Five deals are already set to price today with a possibility of more to come. Among those coming to market, HSBC, Priceline, Sirius, and Whirlpool are some notable mentions. Yesterday’s primary market saw $23.2b priced, led by DELL’s monster deal (2nd largest YTD). Of the new issues, we are active in DELL, AER, and KEY.

In the news: Lowe’s, Staples, and Target reported Q1 profits that beat analysts’ estimates. Salesforce will be reporting aftermarket today is expected to shatter Wall Street’s expectations. Cisco and MGT Capital will also be announcing their Q1 numbers today.

In economic data, the MBA reported that US Mortgage Applications have fallen 1.6% over the past week after previously increasing 4% the week before. At 3:00pm the FOMC will be releasing its Meeting Minutes.

Municipal Bond Market  

Munis were unchanged to start to the day after rallying on the long end during Tuesday’s trading session. We continue to see light demand in the secondary as the market awaits allocations on the largest deal of the year, $2.5bln in new debt for LaGuardia Terminal B. The deal has been bumped about 30bp in presale and we are currently seeing demand of about 10x over. 30 day supply is weaker this morning with $13bln on tap over the next 30 days versus $17bln Monday.

PR trading remains light as the market awaits more news out of the island.  Benchmark 8s firmed up after trading around all time lows, we saw bonds trade Tuesday @ $65.50 (11.91%), after trading around $63.50 last week.   

30 Day visible supply: $13.5bln