Wednesday, June 29, 2016

Corporate Bond Market

US Equity Futures are up for the second straight day following the Brexit sell off. DJ Futures are +91 and the S&P Futures +10 to start the morning. The global tone is positive with all overseas markets showing strength through the overnight. Crude is up to $48.14/ barrel and rates are unchanged with the 10yr Treasury last at 1.465%. Credit is firm with the Invest Grade Index showing 81.85/82.46 and cash is also stronger.

In credit news, there was strong volume and spreads tightened yesterday as the market attempts to return to normalcy. Molson Coors brought a $5.4bn/4 tranche deal that we are active in and Oracle is on the calendar to price a 5 tranche deal today. Hopefully these two large deals will give Dealers the confidence to get off the sidelines.

In economic data, there are a couple of key announcements scheduled for today. First, the MBA reported that the weekly change in US Mortgage Applications has decreased 2.6% last week. To follow, May’s US Personal Income & Spending will be released later this morning.

Municipal Bond Market   

Munis are unchanged this morning after trading weaker across the curve on Tuesday.  We continue to see very little liquidity in the market place with few bidders on BW situations and weak bids.  New issuance continues to lose steam after being the focus of the market for the past two weeks.  The trend should continue today with a significant amount of items out for the bid already this morning and a small percentage expected to trade30 day supply is weaker this morning with $7.8bln on tap over the next 30 days versus $10bln on Tuesday.
PR trading has been lighter than usual as we head into July payments and cross over buyers face volatility in other asset classes.  The market will be watching the senate vote today on the PROMESA bill.  The bill is expected to pass and would be a positive for all PR credits.  PR GOs continue to trade in mid $60s with bonds trading @ 64.50 to start the week. 

30 Day visible supply: $7.88ln