Monday, May 1, 2017

Corporate Bond Market

US Equity Futures are up to start the day with the S&P Futures +29 and the DJ Futures +4.50. Overseas equity markets are mixed with European and Asian equities both mixed. US Treasuries are weaker with yields on the 10 yr at 2.296% and oil is weaker, last quoted $49.07/barrel. Credit is weaker with the Investment Grade Index showing 46.06/47.48 and cash is stronger.

In credit news, April’s primary market saw $28.9bn priced in Investment Grade credit bringing YTD tally to $615.575. High Yield has priced just over $97bn this year. This week is expected to bring at least $25bn in Investment Grade new issuance this week. Issuers will most likely front load this week’s deals ahead of Wednesday’s FOMC rate decision. There are deals announced from United Technologies and The New Home Co.

On the earnings front, DISH and Cardinal Health both reported numbers that beat analysts’ estimates for Q1.

In economic data, there are a few announcements scheduled for today. First, Personal Income & Spending will be reported followed by ISM Manufacturing and Construction Spending.

Municipal Bond Market

This week’s new issue calendar is just north of $7bn and is composed of $5.96 billion of negotiated deals and $1.06 billion of competitive sales. Jefferies is set to price $1.13bn of University of California Regent’s bonds on Thursday. The deal, which is rated Aa2 by Moody’s and AA by S&P and Fitch, is expected to be split into $447.83 million of tax-exempt bonds, $500 million of taxable fixed rate notes, and $186.225 million of taxable bonds. The state of Wisconsin is also scheduled to price a combined $688.31 million in bonds for on Tuesday. The deal, which is rated Aa3 by Moody’s and AA- by S&P and Fitch, will see $403.105 million of general fund annual appropriation refunding taxable bonds maturing from 2018 through 2027. While Wells Fargo will price the $403.105 million in bonds, JP Morgan will price the other $285.205 million in transportation revenue bonds which is rated Aa2 by Moody’s and AA+ by S&P and Fitch. In other news, Puerto Rico was happy to learn on Sunday that they will receive $295 million in Medicaid after Congress finally reached a deal on funding the government through September.