Friday, May 6, 2016

Corporate Bond Market

US Equity Futures are back down to end the week with the DJ Futures -80 and the S&P Futures -11 to start the day. The negative global trend has continued with all overseas equities showing down across the board. Oil is down to $43.81 and rates are up with the 10yr Treasury last at 1.74%. Credit is wider with the Invest Grade Index at 84.87/85.5 this morning while cash is also weaker.

In credit news, it was a busy day for IG Credit with $15.52bn pricing yesterday. Spreads in both IG and HY widened as the day progressed.  Of those issued, we are active in BNP, EQUIFAX, and Shell.

In the news: Chesapeake, Kellogg, MGM, NRG, and Wynn all beat analysts’ estimates for Q1. Acadia, GoPro, and Yelp are among those that missed projections that announced earnings yesterday.

In economic data the US will be releasing the updated Unemployment Rate and Labor Force Participation Rate. Following, the monthly Nonfarm and Private Payroll change for US employees will be announced. The Fed will also be releasing the Consumer Credit change later this afternoon.

Municipal Bond Market   

Munis are unchanged this morning ahead of payrolls.  Focus will shift to the secondary today with this week’s new issuance free to trade.  Accounts should have money to put to work in the secondary with deals coming 7x-10x oversubscribed and funds receiving $700mn in new cash.  NJ City University 4’s of 2035 priced at a 3.24% and traded up to a 3.12% right away in the secondary.  Any deal with a different name or a little bit of extra yield saw the most demand as the market remains starved for yieldy names. 30 day supply is stronger this morning with $12.79 on tap over the next 30 days versus $11bln Thursday.
 PR trading remains light across all debt sectors.  We have seen demand in spots for insured paper with such little yield in the market right now.  PR benchmark 8s continue stabilize in the mid $60s, bonds traded @ $64.25 after trading around $65 earlier in the week.

30 Day visible supply: $12.79bn