IG CREDIT: Secondary Trading Remains in Back Seat vs Issuance
2016-05-18 10:04:41.124 GMT
By Robert Elson
(Bloomberg) — Secondary IG trading ended with a Trace
count of $15b vs $11.7b Tuesday. 144a trading added $2b of IG
volume vs $1.5b.
* The most active issues:
* SPGI 4.40% 2026; just 2 large client tickets accounted
for all the volume, a client buy, a client sale
* BAC 3.50% 2026; client selling 3:2 over buying
* CVX 2.10% 2021; dealer-to-dealer flows led trading
volume
* CS 6.50% 2023 was most active 144a issue; client flows took
67% of volume
* Bloomberg US IG Corporate Bond Index OAS at 156.2 vs 156.1
* 2016 high/low: 220.8, a new wide since Jan. 2012/150.8
* 2015 high/low: 182.1/129.6
* 2014 high/low: 144.7/102.3
* BofAML IG Master Index at +156, unchanged
* 2016 high/low: +221, the widest level since June
2012/+152
* 2015 high/low: +180/+129
* 2014 high/low: +151/+106, tightest spread since July
2007
* Standard & Poor’s Global Fixed Income Research IG Index at
+202 vs +203
* +262, the new wide going back to 2013, was seen
2/11/2016
* The widest spread recorded was +578 in Dec. 2008
* S&P HY spread at +666 vs +675; +947 seen Feb. 11 was the
widest spread since Oct. 2011
* All time wide was +1,754 in Dec. 2008
* Markit CDX.IG.26 5Y Index at 82.5 vs 81.6
* 73.0, its lowest level since August was seen April 20
* 124.7, a new wide since June 2012 was seen Feb. 11
* 2014 high/low was 76.1/55.0, the low for 2014 and the
lowest level since Oct 2007
* IG issuance totaled $20.8b Tuesday, led by Dell’s $20b
second largest deal YTD vs $7.275b Monday
* Note: subscribe bar in upper left corner
* May now stands at $120.26b
* YTD IG issuance now $713,715; YTD sans SSA $588.315
Posted in Uncategorized | Comments Off on Some Corporate Bond Stuff
IG CREDIT PIPELINE: 4 Set to Price; Domestic Names Expected
2016-05-18 09:43:10.966 GMT
By Robert Elson
(Bloomberg) — Set to price today:
* HSBC Holdings (HSBC) A1/A, to price $bench 4-part deal, via
manager HSBC
* 5Y FRN; IPT equiv
* 5Y, IPT +180 area
* 7Y, IPT +215 area
* 10Y, IPT +230 area
* KfW (KFW) Aaa/AAA, to price $bench Global 5Y, via managers
DB/HSBC/JPM; guidance MS+27 area vs IPT MS +28 area
* Bank Nederlandse Gemeenten (BNG) Aaa/AAA, to price $bench
144a/Reg-S 2Y, via GS/HSBC/Nom/RBS; guidance MS +19 area vs
IPT MS +20 area
* The Export-Import Bank of Korea (EIBKOR) Aa2/AA-, to price
$bench 3-part deal, via BAML/BNP/C/GS/HSBC/Nom
* 3Y FRN, IPT equiv
* 3Y, IPT +95 area
* 10Y, IPT +105 area
LATEST UPDATES
* State of Qatar (QATAR Govt) Aa2/AA, mandates Al
Khaliji/Barc/BAML/DB/HSBC/JPM/Miz/MUFG/QNB/SMBC to arrange
investor meetings to begin May 19; USD 144a/Reg-S deal may
follow; last issued in 2011
* Three Gorges Finance I (YANTZE) Aa3//na/A+, to hold investor
meetings May 18-23, via BoC/DB/GS/ICBC/JPM/UBS; 144a/Reg-S
USD deal is expected to follow
* Southern Co. (SO) Baa2/A-; calls May 17-18, sees $8b
issuance this yr
* Priceline Group (PCLN) Baa1/BBB+, has asked BAML/GS/WFS to
arrange investor calls today;last priced a new USD deal in
March 2015
* Kallpa Generacion (KALLPA) Baa3/na/BBB-, mandates managers
for investor meetings May 12-18; 144a/Reg-S deal may follow
* Apple (AAPL) Aa1/AA+, may return to market
* It priced $12b in 9 parts Feb. 16
* Re-opened 3 of the above issues for $3.5b March 17
* Merck & Co (MRK) A1/AA; has not priced a new issue since
Feb. 2015, has $1.5b maturing May 18
* General Electric Company (GE) A3/AA-, has yet to issue YTD;
parent GE Co has $11.1b maturing this year, including $2.3b
this week
* Reynolds American (RAI) Baa3/BBB filed automatic debt shelf;
sold $9b last June (May 13)
* Quest Diagnostics (DGX) Baa2/BBB+, files debt shelf; last
issued in March 2015, $300m matured last month (May 13)
* Statoil (STLNO) Aa3/A+, files debt shelf; last issued USD
Nov. 2014 (May 9)
* Corporate Office (OFC) Baa3/BBB-; debt shelf (April 12)
* Rogers (RCICN) Baa1/BBB+; $4b debt shelf (March 4)
OTHER
* Ford Motor Credit (F) Baa2/BBB; may have ~$7b issuance this
yr (May 10)
* Wal-Mart (WMT) Aa2/AA; 2 maturities in April (April 1)
* GE (GE) A1/AA+; $25b debt possible for M&A, buybacks (Jan
29)
Posted in Uncategorized | Comments Off on Credit Pipeline
It is difficult for me to believe that I am publishing this and difficult to believe that Bloomberg had someone write the story. The strangest little information nugget in the story is that the University of Utah has a lawyer who specializes in restrooms and transgender issues.
Via Bloomberg:
Single-user unisex facilities more expensive but popular now
The bottom line is that ‘people want options for privacy’
At the restaurant at New York’s Museum of Modern Art, the restroom has stalls open to any gender and sinks in a common area. The setup is similar at the Press Lounge in Manhattan, at the Bliss Rebar in Scottsdale, Arizona, and at dozens of other establishments. While politicians argue and courts weigh in, businesses are forging ahead with new bathroom designs.
The most private of public spaces has been evolving for more than a decade, in the interests of privacy and more equitable distribution for women and the disabled. Now the pace of change is quickening as the U.S. grapples with demands that transgender people be allowed to use the toilets of their choice.
“It’s taken on a level of intensity and interest,” says Erik Kocher, a principle at Hastings+Chivetta architects in St. Louis who counts about a half-dozen different alternative-bathroom blueprints on the boards at the firm. “It’s much more out there.”
To be sure, lavatories in most big venues, such as sports stadiums, will likely continue to be multiple-stalled and gender-segregated because of building-code requirements. But retailers including Target Corp., Starbucks Corp. and Barnes & Noble Inc. have set new rules or clarified policies to allow customers to make privy choices that don’t correspond to their birth genders. And prototypes in restaurants, on college campuses and elsewhere show how the public-latrine paradigm is shifting.
Grossed Out
Codes written before the current transgender-access debate are driving some changes. The International Codes Council, whose edicts are adopted by most U.S. states and municipalities, issued regulations that in 2018 will require individual-user public toilets to be gender neutral, with door signage declaring them so. It’s too soon to know whether the ICC will address the multiple-user question when it crafts its next rulebook, for 2021.
Public bathrooms are a political hot potato and a very personal matter. Some women, for instance, might not care who’s in the next stall but wouldn’t be thrilled about applying mascara next to a guy washing his hands. Others are grossed out at the idea of sitting where a man just did his business. In Yelp reviews of restaurants with unisex facilities, opinions are all over the map, with people applauding the accommodations or calling them creepy. Some men don’t like the idea of urinals going the way of the outhouse — but lavatories are now on occasion being constructed without them.
Stone Benches
The transgender factor will propel experimentation with more individual but equal spaces, says Terry Kogan, a professor at the College of Law at the University of Utah who studies restrooms and transgender issues. The bottom line: “People want options for privacy.”
That explains the orders for floor-to-ceiling stall panels flooding into Ironwood Manufacturing Co. in Snohomish, Washington, where co-owner Mark Nielson says transgender access has become a concern for some customers.
The search for a widely acceptable comfort room is probably 18 centuries in the making. The Romans had the first documented public latrine, according to Zena Kamash, a lecturer in Roman archeology and art at the University of London. Patrons back then sat cheek to jowl over holes in stone benches, with rushing water below carrying away the waste.
In the U.S., Massachusetts first codified the gender-specific concept in the 1880s, as commercial buildings began embracing indoor plumbing. Such differentiation was the law of the land by the 1920s. Small businesses had individual-user amenities, and those whose cramped quarters allowed only one had to make it unisex — or, in today’s parlance, gender neutral.
Cabana Style
Now, in North Carolina — where a new law bars people from public restrooms that don’t correspond to their birth sex — Charlotte’s Westin hotel is adding a single-user, all-gender facility to its second-floor meeting area. The American Restroom Association worked with the city of San Diego to design a unisex-stall bathroom at Kellogg Park.
In 2014, during exhibitions that featured transgender artists, the Whitney Museum of American Art in New York made restrooms on one floor all gender. People not comfortable with that were directed to traditional alternatives elsewhere, says Danielle Linzer, director of access and community programs. The new Whitney building has several single-user gender-neutral units, though no multi-user unisex commodes.
At Hastings+Chivetta, architects are working on a college recreation facility with cabana-style showers rather than a central locker room. Clients are testing new ideas, Kocher says. One, a university in the Midwest, asked for a three-story building with 18 single-user restrooms. It would be cheaper to have multiple-stall rooms, but the route the school picked is popular because it takes gender identify out of the equation.
“Colleges and universities have been on the cutting edge of this,” Kocher says. In some cases, designers face resistance from enforcers of local building codes that require ratios of men’s and women’s rooms. “Zoning rules are definitely behind the times,” he says.
Transgender people aren’t asking for a new model, says Kasey Suffredini, chief program officer with Freedom for All Americans, an advocacy group. Their demand is simply for the right to use the lavatory that fits their gender identify, she says. “It’s not for gender neutral bathrooms. It’s not for single stalls. This is just where the long-standing discomfort with restrooms intersects with discomfort with minority identities — and then we have a fight over bathrooms.”
Posted in Uncategorized | Comments Off on Gender Controversy and Bathroom Design
Via WSJ:
By Richard Rubin
May 18, 2016 12:00 a.m. ET
1 COMMENTS
If Democrats retake the Senate this fall, tax policy will fall to Sen. Ron Wyden of Oregon, who is beginning to elaborate on his priorities and plans.
Mr. Wyden recently released a plan to overhaul the rules companies use to calculate their annual depreciation deductions on capital assets. On Wednesday, he will take aim at the use of derivatives as a tax-avoidance technique. Further detailed proposals are on the way to shrink the difference between the tax rules for most Americans and the very wealthy, the senator said.
“The fortunate can basically, with good tax counsel, figure out what they’re going to pay and when they’re going to pay it. So we would radically change that,” Mr. Wyden said in an interview. “We’re trying to lay out the ideas that we think are central to developing bipartisan tax reform.”
Related
EU, U.S. Reach Agreement on Derivatives Oversight (Feb. 10, 2016)
SEC to Crack Down on Derivatives (Dec. 4, 2015)
European Commission Drops Probe Into Banks on Derivatives (Dec. 4, 2015)
Mr. Wyden’s derivative proposal would require owners of certain derivatives to mark their value to market each year and pay income taxes on any gains as ordinary income, not at lower capital gains rates. The plan would also require taxpayers to pay capital gains taxes as if they sold an asset in certain cases. That could be triggered, for example, if they enter into an agreement such as a collar, which uses put and call options to lock in future capital gains within a narrowly specified range without actually realizing those gains, said an aide to Mr. Wyden.
The proposal will exempt employee stock options and derivatives used to hedge business transactions as well as other derivatives commonly used by insurance companies, pension funds and others, the aide said.
According to Mr. Wyden’s office, the proposal would raise about $16.5 billion in tax revenue over the next decade.
Mr. Wyden’s proposal builds on a 2013 plan from then-Rep. Dave Camp (R., Mich), chairman of the House Ways and Means Committee, and ideas from the Obama administration. Business groups have warned about unintended consequences from those ideas.
Mr. Wyden is a longtime advocate of revamping the entire U.S. tax system to lower tax rates, broaden the tax base and simplify the rules. Other Democrats, including front-running presidential candidate Hillary Clinton, have been emphasizing a narrower set of ideas, namely higher tax rates on high-income households and new tax credits to help families pay for out-of-pocket health-care costs and reward companies for starting apprenticeship programs.
May has, so far, been a good month for the dollar, which is up 10% this month against the South African rand, 4% against the Australian dollar and top of the major currency league. This despite the fact that oil prices too, are higher. The negative correlation between oil prices and the dollar has broken down several times (most of 2010, for example), but breaking correlations make day-to-day trading difficult. It’s worth observing, however, the break between the trend in oil (up) and industrial metals (down). Oil prices are supported by steady increases in demand and a gradual adjustment of supply. Metals prices are still adjusting to the fall in Chinese demand. And maybe the dollar in 2016 will correlate better (negatively) with metals prices than with oil. We will continue to favour oil-sensitive currencies to China and metals-sensitive ones (NZD, AUD, ZAR, BRL, KRW, PHP, SGD).
Overnight, oil prices edged higher but the talk is all of markets re-pricing the odds of the Fed hiking sooner rather than later. Bloomberg now puts the chance of a June hike at 12%, up from 4% a week ago, so higher rather than high. The chance of a hike by December has increased to 67% from 51% a week ago. After a marginal upside surprise in the CPI data yesterday, will we read anything less dovish in tonight’s FOMC Minutes than we heard after the meeting?
What is significant isn’t so much the increased talk of Fed hiking, as the wider market reaction. 10year Treasury yields have edged up to just 1.77%, with TIIPS steady at 14bp, but one chart-fanatic assures me that outside the US, major equity indices are pretty much all in a bear market now. If a 67% chance of a single Fed rate hike in 2016 is enough to damage sentiment, then we really are in a fragile state and the path between data that is weak enough to cause concern about global growth and strong enough to cause a rate-alarm to risk assets, is absurdly narrow.
I’m not seeing much in yield differentials, real or nominal, to drive EUR/USD outside its range, but all point downwards. If we do get any further pick-up in Fed hiking talk, we’ll have a look at life below EUR/USD 1.10 again, but the sogginess of the UK data means that we’re happy to express that view through shorts in GBP/USD. This morning sees UK unemployment and wage data, that will probably see a small increase in unemployment (+12k, ILO rate to 5./2 from 5.1) and a small bounce in average weekly earnings growth to 2.3% from 2.2%
The stronger dollar is also threatening our short USD/CAD trade, which has a stop at 1.30. I’ll stop talking about Canada for a while if that is hit. On the other hand, both NZD/JPY and AZUD/USD are threatening to break below psychologically important levels and if the latter closes below 0.7250 an acceleration lower is possible, even in these choppy markets.
Japan’s economy grew more than expected during the first three months of this year, a development that may dull the prospect of near-term monetary policy easing.
The Japanese economy grew by 0.4 per cent seasonally adjusted quarter-on-quarter from a revised 0.4 per cent contraction (previously -0.3 per cent) in the December quarter. That came in comfortably above expectations for 0.1 per cent growth.
At an annualised pace, growth lifted to 1.7 per cent quarter-on-quarter in the first three months of 2016, a reversal from the December quarter’s 1.7 per cent decline (previously -1.1 per cent), and well ahead of expectations for growth of 0.3 per cent.
The data, at the headline level, may provide some comfort for the Bank of Japan, which took interest rates into negative territory on January 29. The experiment failed to tame the yen, which is now trading stronger than before that decision, and has been seen as a negative for commercial banks, whose profitability is being eroded by the negative rates.
Moreover, there is some concern among economists that June quarter GDP could be affected, not just by the relative strength in the yen, but also supply chain disruptions following the earthquakes that hit the southern island of Kyushu in April.
It is worth noting, though, that Japan’s contraction in the December quarter had previously been revised higher. Those positive revisions have been reversed today, and then some: the annualised pace of contraction in the fourth quarter was initially revealed in February to be -1.4 per cent.
There were some encouraging signs in terms of private consumption, which grew by 0.5 per cent quarter-on-quarter in the March quarter – boosted by household consumption – from a 0.8 per cent contraction in the final three months of 2015. However, this is still down 0.6 per cent from a year ago.
Exports grew by 0.6 per cent quarter-on-quarter in the first three months of this year from a 0.8 per cent quarterly drop at the end of 2015, while the pace of decline in imports moderated.
The yen swung wildly on the release of the data, trading as much as 0.1 per cent weaker and 0.2 per cent stronger. It was sitting 0.1 per cent stronger at Y109.09 per dollar about 15 minutes after the release.
The broad Topix stock market index and the Nikkei 225 were both up 0.1 per cent in early trade.
Financial markets are being overly pessimistic about the US outlook and may underestimate the chances of an interest-rate increase as soon as June, according to a senior Federal Reserve official.
Dennis Lockhart, the president of the Atlanta Fed, said recent inflation readings had been “encouraging” while early signs pointed to growth rebounding from a soft first quarter, meaning that June should be a possibility for a move.
The policymaker, who does not vote on the board this year, stressed that he had not made up his mind about whether the central bank should lift rates next month, as he gauges incoming data and risks such as the UK referendum on membership of the European Union.
But in an interview with the Financial Times, Mr Lockhart said: “The markets may be underestimating the degree of open mindedness,” about the option of a near-term increase.
He added: “If the data continue to be encouraging, I would certainly entertain some policy move in June. I don’t think June should be taken off the table. I am of the view — others, my colleagues have said this — that markets may be reading this more pessimistically than I am. The [market-implied] probability of a rate increase in June is quite low.”
Mr Lockhart joins Eric Rosengren, the president of the Boston Fed, in warning investors that their expectations for Fed rate increases may be excessively conservative. Futures prices suggest traders see less than a 10 per cent chance of a move at the June meeting, with somewhat higher odds in July.
One of the reasons for investor caution has been weak first-quarter numbers and volatile markets earlier this year. However the Fed in April signalled its worries about global risks had receded since its March meeting. The US has shown signs of bouncing back from the weak start to the year, with retail sales rising 1.3 per cent in April and manufacturing production growing for the first time in three months.
The Atlanta Fed’s GDP tracker points to annualised growth of 2.5 per cent in the second quarter of 2016, well ahead of the 0.5 per cent reading in the first three months of the year. Core inflation, which strips out food and energy, has also looked firmer, rising 0.2 per cent on the month and 2.1 per cent on the year in April.
“The second quarter indeed looks to be rebounding from the first quarter,” said Mr Lockhart, cautioning that it was still quite early to be judging the second-quarter data. “Apparently we are getting back on track in terms of growth in consumption, consumer activity.”
Mr Lockhart said he had no reason to argue anyone away from the outlook of two to three more rate moves this year “providing the economy continues to perform along the lines of … my forecast.”
Firmer data have not cleared all the hurdles to a move this summer, however. Uncertainty about the path of policy has been heightened by the UK referendum on its membership of the European Union a week after the Fed’s June meeting; some investors argue a Fed move so near a potentially market destabilising event would be hazardous.
“The Brexit question is a real consideration,” acknowledged Mr Lockhart. “It is a consideration for me as a US policymaker to the extent that it affects the domestic, real economy or could affect the domestic, real economy. That would most likely be through financial market turbulence as we get closer to the data of the vote, of the referendum.”
That leaves open the question of whether July might be a better month for a Fed move. Mr Lockhart said by the July meeting policymakers would have a bit more economic data covering the second quarter as well as knowing the result of the UK referendum. “I think if it were a question of being cautious in June, July should be a real possibility, but with communication that prepares the markets.”
Janet Yellen, the Fed chair, will testify to Congress between the June and July meetings, providing her with the opportunity to tee up a possible rate move if necessary.
Uncertainty about the US policy outlook has also been affected by the US presidential election this November. Mr Lockhart said he was “open to the view that the unusual circumstances of this particular election cycle could be influencing consumer decision making, and for that matter business decision making”.
For that to influence the Federal Open Market Committee, however, there would have to be evidence of greater caution among households and businesses denting the economic data. “If we don’t see that, I don’t think there is much of a connection between the fact that we are in an election cycle and the FOMC pursuing its monetary policy objectives,” Mr Lockhart said.
Posted in Uncategorized | Comments Off on Lockhart Says Market Underestimating Chances of June Rate Hike
CHINA: The April Property Report is likely to show stability, with 40 of 70 cities already reporting price increases in March.
JAPAN: The Bberg consensus expects Japan 1Q Real GDP growth at +0.3% (SAAR) versus -1.1% annualized in 4Q, although monthly data suggest the risk of another negative print.
AUSTRALIA: The Bberg consensus expects the Hourly Wage Cost Index held at 2.2% YOY in 1Q , in line with other countries, although headline inflation held at 1.3%, above most other developed countries.
RUSSIA: The Bberg consensus expects that April Industrial Production will be reported at -0.5% YOY, the same as March, and would be the 14th YOY decline in the last 15 months.
EURO ZONE: The Bberg consensus expects the Headline and Core CPI changes (YOY) will be confirmed at -0.2% and 0.7%, respectively.
UK: The Bberg consensus expects the April Jobless Claims Count to have inched up 5.0K following a 6.7K rise in march, small net increases, The consensus expects that the March (3-month average) Unemployment Rate will have held at 5.1% but the 3-month Employment change to slow to 0, weakest since last June, while the annual change in Wages (ex-bonuses) for March will have inched up to 2.3% YOY from 2.2% for the 3-month average in February.
US: Industrial Production Rebounds Strongly in April
· Industrial sector activity rebounded at a very brisk 0.7% m/m pace in April, bettering the market consensus for a more modest 0.3% m/m advance.
· Stronger utility production and the rise in manufacturing sector activity were the key drivers for the pick-up in industrial output.
·The gains in manufacturing output offers some encouraging news on the US economic outlook, though the intense recession in the mining sector appears to continuing.
US industrial output rose at a very robust 0.7% m/m pace in April, bettering the consensus expectation for a more modest 0.3% m/m advance. The gains, however, come on the heel of the downwardly revised 0.9% m/m plunge the month before (previously reported as -0.6% m/m). The gain in this indicator marks only the second advance since August last year, reflecting the continued headwinds coming from the strong dollar, weak global demand and weak energy prices.
Higher manufacturing sector activity, which gained a healthy 0.3% m/m, and the weather-induced rebound in utility production (up 5.8% m/m) were the key drivers for the advance. The mining sector, however, continues to languish in an intense recession, falling a further 2.3% m/m. Output in this sector is now down a cumulative 18% from the December 2014 peak, owing to the steep fall in energy prices. Capacity utilization edge higher, rising to 75.4% from 74.9%, though it remains well south of the 78.9% cycle peak reached in November 2014.
The overall tone of this report was encouraging. Nevertheless, with the strong gains in utility production likely to be unsustainable and the rebound in the manufacturing sector looking vulnerable, the outlook for the industrial sector appears to be quite weak – particularly given signs of some softening in underlying domestic momentum.
Posted in Uncategorized | Comments Off on Industrial Production
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2016 is 2.5 percent on May 17, down from 2.8 percent on May 13. The second-quarter forecast for real residential investment growth declined from 5.3 to 2.5 percent after this morning’s housing starts release from the U.S. Census Bureau, the forecast for real consumer spending growth ticked down from 3.7 percent to 3.6 percent after this morning’s Consumer Price Index release from the U.S. Bureau of Labor Statistics, and the forecast for the contribution of inventory investment to second-quarter growth declined from -0.24 percentage points to -0.39 percentage points after this morning’s industrial production release from the Federal Reserve. The latter decline was concentrated in motor vehicle and parts dealers’ inventories.