Tuesday, April 25, 2017

Corporate Bond Market

US Equity Futures are off to a strong start this morning with the S&P Futures +4.50 and the DJ Futures +115. The global tone is strong with European and Asian equities also trading higher across the board. US Treasuries are wider with yields on the 10 yr at 2.296 and oil is up to $49.26/barrel. Credit is tighter this morning with the Investment Grade Index showing 46.89/48.33 and cash is also stronger.

In credit news, Monday’s primary market saw $2.6bn priced in Investment Grade with US Bancorp and TD Ameritrade leading the way. April’s volume is up to $78.9bn in Investment Grade new issuance bringing the YTD tally to $589.275- up 4% y/y. The consensus estimate calls for less than $25bn to price this week. There are deals announced from: Bill Barrett, PhosAgro, Rusal Capital, and Ziraat Bankasi so far for today.

On the earnings front: Catepillar, Corning, McDonalds, Polaris, Du Pont, JetBlue, 3M, and Valero all announced Q1 2017 earnings that outperformed Wall St’s earnings expectations for Q1 2017 while; CIT, Coca Cola, Lockheed Martin, and T Rowe Price fell short of analysts’ expectations.

In economic data, there are a few key announcements scheduled for today. First, the monthly change in FHFA Housing Price Index will be reported followed by March’s tally of New Home Sales and Consumer Confidence.

Municipal Bond Market

Municipal bonds finished weaker on Monday after treasury yields soared in the morning before recouping a portion of their losses. Today Goldman will price almost $4bn in bonds from Kaiser Permanente. The deal consists of $1.9bn in California Hlth Facs Fin revenue bonds and $2bn in taxable bonds (both rated AA- by S&P and A+ by Fitch). Wells Fargo is seen pricing $994.74 million in NY & NJ Port Authority consolidated bonds which are rated Aa3 by Moody’s and AA- by S&P and Fitch. On Thursday Merrill will price more than half a billion in Los Angeles Dept of Wtr & Pwr revenue bonds. In Puerto Rico news, Banco Popular impressed investors when it beat the highest earnings estimates. We are still waiting for more information on the recently developing PREPA lawsuit.