Thursday, June 1, 2017

Corporate Bond Market
US Equity Futures are mixed to start the month with the DJ Futures -8 and the S&P Futures +1. Overseas equities are mixed through the overnight. US Treasuries are weaker with yields on the 10yr last at 2.227% and oil is up, last quoted $48.43/barrel. Credit is wider with the Investment Grade Index showing 44.08/45.42 and cash is weaker.

In credit news, yesterday’s primary market saw $9.3n priced in Investment Grade Credit. From yesterday’s new deals, we are active in CIT and GS. May’s tally ended at $181.145bn priced in Investment Grade new issuance. There are deals announced from: Caterpillar, Arrow, DBS Group, UBS, and more to follow.

In economic data, May’s ADP Job’s report exceeded expectations with a tally of 253k vs estimates of 180k new jobs.

Municipal Bond Market
Wednesday was a big day for munis as most of this week’s new issue supply came to market. As a result, munis finished the day higher with the yield on the 10-year benchmark G.O. falling three basis points to 1.90%. Morgan Stanley priced Connecticut’s $370 million of state revolving fund general revenue bonds in a deal rated AAA by Moody’s, S&P, and Fitch. The $250 million of green bonds were priced for retail as 3’s to yield 1.02% in 2020 and as 3’s and 4’s to yield 3.08% in a split 2036 maturity. The $120 million of Series 2017B refunding bonds were priced for retail as 5’s to yield 1.16% in 2021 and 1.46% in 2023. We also saw Merrill price the Louisiana Local Government Environmental Facilities and Community Development Authority’s $249.09 million of hospital refunding revenue bonds for the Women’s Hospital Foundation in a deal rated A2 by Moody’s and A by S&P. The $229.12 million of tax-exempts were priced as 3’s to yield 1.74% in 2022, 5’s to yield 3.37% in 2027 and 3.49% in 2044, and as 4’s to yield 3.80% in 2041. The $19.97 million of taxables were priced at par to yield from 2.05% in 2018 to 3% in 2022. Last but not least, we saw Piper Jaffray price the Austin Independent School District’s $219.36 million of building and refunding bonds in a deal which is backed by the Permanent School Fund guarantee program and rated AAA by Moody’s and Fitch. The issue came to market as 5’s to yield 1% in 2019 to 2.82% in 2037.