Wednesday, June 21, 2017

Corporate Bond Market

US Equity Futures are down to start the session with the DJ Futures -12 and the S&P Futures -4.50. The global tone is mixed with European equities trading down and Asian markets mixed through the overnight. US Treasuries are a bit weaker with yields on the 10yr last at 2.16% and crude oil is down; last quoted $43.61/barrel. Credit is wider with the Investment Grade Index showing 43.58/44.86 and cash is tighter.

In credit news, Monday’s primary market saw $1.5bn priced from 3 issuers in Investment Grade Credit; June’s tally is up to $56.625bn. In High Yield, First Quality Finance and Carrols Restaurant priced new deals yesterday. YTD High Yield issuance totals $134.8bn. From yesterday’s new deals, we are active in Jackson National Life and First Quality Finance. Today’s primary market is hoping to rebound from a light couple sessions to start this week. There are deals from Charter, Westpac and Suntory Holdings on the calendar for today’s business.

In economic data, MBA Mortgage Applications grew 0.6% last week and May’s Existing Homes Sales will be reported this morning.
Municipal Bond Market

Munis finished unchanged for the second day in a row despite the 10-year Treasury declining a couple basis points to 2.15%. Traders saw some competitive bond deals come to market including the states of Georgia and Massachusetts and Chicago's O'Hare airport. $1.4bn Georgia GO’s were sold in 4 separate offerings all rated triple-A by Moody’s, S&P, and Fitch. Merrill won the $430.53 million of Tranche 2 GO’s with a true interest cost of 3.06% in an issue priced as 5’s to yield from 1.94% in 2028 and 3’s to yield 3.261% in 2037. Morgan Stanley won the $358.11 million of Tranche 1 GO’s with a true interest cost of 1.46% in addition to winning the $352.45 million of refunding GO’s with a true interest cost of 1.899%. Unfortunately, pricing information on these deals was not available. Last but not least, Wells Fargo won the $273.45 million of taxable GOs with a true interest cost was 2.99%. The issue was priced as 4’s to yield 1.25% in 2018 to 3.15% at par in 2033 and a 2037 maturity was priced at par to yield 3.30%.