Wednesday, June 7, 2017

Corporate Bond Market

US Equity Futures are mixed to start the day with the DJ Futures -1 and the S&P Futures flat. The global tone is positive with overseas equities trading higher through the overnight. US Treasuries are a bit weaker with yields on the 10yr last at 2.152% and oil is down, last quoted $47.89/barrel. Credit is weaker with the Investment Grade Index showing 43.09/44.42 and cash is tighter.

In credit news, Monday’s primary market saw $5.65bn priced in Investment Grade Credit. June’s tally has crossed $30bn. From yesterday’s new deals, we active in: Union Electric, Harley Davidson, Coach and KeyBank. There is a deal announced from KFW for today’s business.

In economic data, Mortgage Applications grew 7.1% last week.  

Municipal Bond Market

Munis joined Treasuries in finishing stronger on Tuesday as the first of the week’s supply came to market. Yields on both the 10-year and 30-year benchmark muni GO decreased three basis points to 1.83 and 2.66% respectively. Yesterday Siebert Cisneros Shank priced Chicago’s $396.74 million of wastewater transmission revenue bonds in a deal rated A by S&P and AA-minus by Fitch. The $181.14 million of Series 2017A project bonds came to market as 5’s to yield 1.53% in 2020, 3.65% in 2037, and 3.74% in 2047. The Series 2017A project bonds also included a 2042 term bond priced to yield 3.40% with a 5.25% coupon and a 2052 term bond priced to yield 3.91% with a 4.00% coupon. The $215.6 million of Series 2017B refunding bonds were priced as 5’s to yield 1.13% in 2018 and 3.66% in 2038. We also saw the Metropolitan Washington Airports Authority come to market with a $523.785 million deal that was priced as 1’s to yield 0.85% in 2017 and 5’s to yield 3.06% in 2037. Two term bonds were also priced as 5’s to yield 3.12% in 2042 and 3.18% in 2047. This deal was priced by RBC Capital Markets and rated Aa3 by Moody’s and AA-minus by S&P and Fitch. With respect to Puerto Rico, Judge Swain has agreed to rule on the “default” status of the COFINA bonds and even set deadlines for a quick ruling in mid-July.