Wednesday, August 16, 2017

Corporate Bond Market

Global equities are all positive to start the morning. In Asia, the NIKKEI is up 30 points and the Hang Seng is up 156 points. Over in Europe, the Euro Stoxx is up 30 points and the FTSE is up 42 points. Likewise, in the US we have the DOW up 44 points, S&P up 4.5, and the NASDAQ 100 up 12.5 points. As the broader market grinds higher, the VIX is trading below 12 and gold is lower for the third consecutive session. The 10yr treasury stands at 2.28% which is mostly unchanged from yesterday. As most of us know, Amazon’s $16bn 7-tranche debt deal priced yesterday pushing IG and HY tighter. Excluding Amazon, $3bn was priced from 4 domestic issuers across 7 tranches bringing weekly volume to $23.1bn. In economic news, we’ll see data from mortgage applications and housing starts and later on we will get a glimpse of the minutes from the July Fed meeting.

Municipal Bond Market

Munis finished weaker on Tuesday as the yield on the 10-year benchmark muni GO rose three basis points to 1.91%. Several large competitive deals came to market with Mecklenburg County, N.C, leading the way. Merrill won $225 million of the Mecklenburg County GO public improvement bonds with a true interest cost of 2.74%. The deal, which was rated AAA by all three rating agencies, was priced as 5’s to yield 0.92% in 2020 and 3’s to yield 3.14% in 2037. Today we will see Maryland sell roughly $1.3bn of GO bonds in the competitive sector. The deal, which is rated AAA by all three rating agencies, will come in two separate offerings and consist of $792.83 million state and local facilities loan tax-exempt refunding GOs and $550 million state and local facilities loan tax-exempt GOs.