Wednesday, April 26, 2017

Corporate Bond Market

US Equity Futures are flat to start the session with the S&P Futures and the DJ Futures both unchanged. The global tone is mixed with European and Asian mixed. US Treasuries are a bit tighter with yields on the 10 yr at 2.327% and oil is weaker, last quoted $49.22/barrel. Credit is stronger with the Investment Grade Index showing 45.257/46.559 and cash is wider.

In credit news, yesterday’s primary market saw $2.75bn priced in Investment Grade credit and just 1 deal priced in High Yield. Internationally, there were a handful on emerging market deals that were brought to market yesterday. From yesterday’s new deals, we are active in: Nextera Energy, Orazul Energy, and Kaiser Foundation Hospital. There are deals announced from: KOKS Finance, Saka Energi Indonesia, Credit Bank of Moscow, Asian Development Bank, and State Grid so far.

On the earnings front: Hess, Boeing, State Street, Twitter, United Technologies, Santander, Axalta, Thermo Fisher, Procter and Gamble, Pepsi, and Baxter all announced earnings this morning that outperformed Wall St’s earnings expectations for Q1 2017.

In economic data, MBA Mortgage Applications grew 2.7% last week.

Municipal Bond Market

Yesterday Goldman Sachs priced $2.12 billion in California Health Facilities Financing Authority revenue bonds for Kaiser Permanente. The deal came in 5 tranches and was spread across 8 maturities. $1.3 billion of fixed-rate bonds were priced as 4’s in 2038 at 3.83%, as 4’s in 2044 at 3.95%, as 5’s in 2047 at 3%, and 4’s in 2051 at 4.03%. The next largest tranche saw $408.74 million in green bonds that were priced as 5’s at 2027 to yield 2.55%. According to traders, the deal, which was rated AA-minus by S&P and A-plus by Fitch, received a lot of interest and was thought to be relatively cheap. Yesterday also saw Wells Fargo price $694.74 million of tax-exempt consolidated bonds for Port Authority of New York and New Jersey. These bonds were rated Aa3 by Moody’s and AA-minus by S&P and Fitch. $444.74 million of the tax-exempt consolidated bonds were priced for retail as 5’s to yield 1.43% in 2020 and 3.43% in 2037. Last but not least, Siebert Cisneros Shank priced $226.82 million of Atlanta water and wastewater revenue refunding bonds across 4 maturities. The deal, which is rated Aa2 by Moody’s, AA-minus by S&P, and A-plus by Fitch, was priced to yield from 1.27% with 5’s in 2020 to 1.96% with 5’s in 2024 and from 2.56% with 5’s in 2028 to 3.61% with 3.5’s in 2039.