Tuesday, May 3, 2016

Corporate Bond Market

US Equity Futures are lower to start the session with the DJ Futures -104 and the S&P Futures -13 in early trading. There is a negative global trend with all overseas equities markets showing weakness this morning.  Oil is down to $44.12 after last week’s fierce rally and rates are the only product showing promise is the 10yr Treasury up to 1.8%. Credit is wider with the Invest Grade Index at 79.9/80.4 this morning while cash is also weaker.

In credit news, US STEEL CORP will be nearly doubling their 5yr 1st Lien Notes up to $500mn. $2.55bn IG Credit priced yesterday to start the month. May’s IG new issuance is expected to tally $130bn (slightly lower than April’s $135.15bn total). There was no new HY Credit issued yesterday following the busiest month of the year totaling 31 deals for $31.355bn.

In the news: CVS, Diamond Offshore, Macquarie, Molson, Nissan Pfizer, Sprint, Sysco outperformed their respective Q1 projections. Some big names that missed on analysts’ estimates are: AIG, FHLM, UBS, and Valero. Keep a look out for: CBS, Live Nation, Western Union and Zillow.

 In economic data, the dollar dropped to an 18month low sending Treasuries and Gold up. The US IBD/TIPP will be releasing the Index if Economic Optimism. In addition, the US will be announcing the US Light Vehicle Sales.

Municipal Bond Market 

Munis are stronger again this morning after a slightly firmer tone to start the week.  We expect to see extremely strong demand for the primary right out of the gate this morning $8.2bn in new debt pricing this week.The calendar is pretty diversified with a variety of different names including Jersey City University, The Walt Disney Family Museum; and the North Texas Toll way Authority.  The secondary will take a backseat until later in the week once customers and dealers are able to assess their allocations to new deals.  30 day supply is stronger this morning with $13bn on tap over the next 30 days versus $10bn Monday.

In PR news, the commonwealth missed payment on $420mn in GDB debt principle.  The island continues to negotiate with creditors in order to keep proceedings out of court.  The market was pretty much unchanged after the announcement with a default essentially priced in.  BenchmarkGOs continue to trade @ $65 after the missed payment.

30 Day visible supply: $13bln