Tuesday, August 22, 2017

Corporate Bond Market
Good morning—Global equities are mostly higher to start the morning. In Europe, the Euro Stoxx is up 18 points, FTSE up 100 points, and the DAX up 96.5 points. Asian stocks are more mixed with the Nikkei up 20 points and the Hang Seng down 21 points. US stocks are all in the green to start the session with the DOW up 34 points, S&P up 4.25 points, and the NASDAQ up 22.5 points. The US 10yr stands at 2.20% after both IG and high-yield credit indexes widened yesterday. Today we’re expected to see data on US crude inventories in addition to Richmond Fed manufacturing. As volatility continues to heat up, issuance is rather weak today. While there are no significant deals in the high-yield space, we’re expecting to see Swedish Export Credit and IBRD price today in the IG space.

Municipal Bond Market
Munis finished stronger on Monday as the yield on the 10-year benchmark muni GO fell one basis point to 1.90%. Issuance for this week is light with volume estimated at $4 billion. All eyes will be on a $5.4 billion note offering from the state of Texas which is the largest short-term sale of the year. The deal,  which is rated MIG1 by Moody’s and SP1-plus by S&P, will be sold in the competitive space as Series 2017 tax and revenue anticipation notes. Today the negotiated sector will be dominated by Washington Health Care’s $265.895 million of Series 2017 revenue bonds for the Virginia Mason Medical Center. Wells Fargo is set to price the deal today, which is rated BBB by S&P and Baa2 by Moody’s.