Tuesday, May 2, 2017

Corporate Bond Market

US Equity Futures are down to start the day with the DJ Futures -18 and the S&P Futures -1.75. Overseas equity markets are mixed with European equities mostly stronger and Asian markets mixed. US Treasuries are weaker with yields on the 10 yr at 2.331% and oil is stronger, last quoted $49.17/barrel. Credit is tighter with the Investment Grade Index showing 45.679/47.107 and cash is also stronger.

In credit news, yesterday was light in Investment Grade new issuance pricing just $4.35bn from 2 issuers. We are active in both, Kimberly Clark and Unitec Technologies from yesterday. Today is expected to be a heavy day in the primary market ahead of tomorrow’s FOMC Rate Decisions.

Municipal Bond Market

Yesterday was very quiet in the muni market. Munis finished the day weaker as yields on the benchmark 10-year rose to 2.183%. Traders anticipate $7.02bn of new issuance this week including negotiated deals from University of California Regent ($1.1bn), Kentucky Economic Development Finance Authority ($454.815 million), Owensboro Health ($495.3 million), and the state of Wisconsin ($688.31 million). We will also see competitive deals from Minneapolis ($80 million), City of Lawrence, Kansas ($20.5 million), and the Virginia Public School Authority ($17.9 million). Collectively, municipalities plan to sell up to $14.7bn of bonds in the next month. In other news, the stay on litigation that protected Puerto Rico from lawsuits expired today. Bondholders have already filed lawsuits against Puerto Rico as they try to recoup millions of dollars invested in PR bonds. If and when Puerto Rico announces a bankruptcy-like procedure to restructure its $70bn in debt, it will be the largest US municipal bankruptcy ever.