Wednesday, June 8, 2016

Corporate Bond Market

US Equity Futures are up to start the day with the DJ Futures +30 and the S&P Futures +3.50. European equities are down and Asian markets are mixed through the overnight. Oil is continuing to rally up to $51/ barrel and rates are also stronger with the 10yr Treasury last quoted at 1.71%. Credit is firm with the Invest Grade Index showing at 72.9/73.5 and cash is also stronger this morning.

In credit news, yesterday was a decent day in new issuance. The Investment Grade primary market saw $9.35bln priced and $1.175bln in the High Yield space. Of the new issues, we are active in: ANZ, Credit Suisse, Wells Fargo, and VALE. Today is expected to be another $10bln+ day in new issues. Asian Development Bank, Ontario, and Bank of Montreal will be leading the way in IG and Dell is set to issue a 2-part deal in the HY space.

In economic news, the MBA will be reporting the change in US Mortgage Applications over the past week.

Municipal Bond Market   

Munis are stronger again this morning after rallying across the curve on Tuesday.  We saw extremely aggressive buying across all sectors as customers attempted to put as much money to work as possible.  New issuance was well received with most deals coming in oversubscribed. The focus will certainly be on the primary today as accounts continue to put money to work and dealers attempt to add line items.  The highlight of today’s calendar will be the final pricing on $880mln AMT American Airlines bonds.  The deal was 5x oversubscribed during yesterday’s order period.  30-day supply is weaker this morning with $12bln on tap over the next 30 days versus $17bln Tuesday.

PR trading remains light as approach July 1st as the market waits on more news out of the commonwealth.  We continue to see very light demand for non-insured paper with the exception of PREPA debt which has rallied over the past two weeks.  Insured paper remains in high demand as it currently offers one of the few attractive yield opportunities in the market right now.  PR benchmark GOs continue to trade in the mid $60s with bonds trading @ $64.50 on Tuesday.

30 Day visible supply: $12.9bln