Across the Curve

Should the Treasury Offer Longer Dated Debt?

May 23rd, 2016 5:42 am

Via Bloomberg:
May 22, 2016 — 6:00 PM EDT
Updated on May 23, 2016 — 5:05 AM EDT

The U.S. Treasuries market is a world-beater when it comes to sheer size, depth and liquidity. Yet in one area it’s falling behind.

To lock in historically low interest rates, Belgium, Canada, France, Mexico, Spain, Switzerland and the U.K. have all sold debt maturing in 40 to 100 years since 2014, even if infrequently. Not the U.S., which in the interest of keeping sales regular has stuck to securities of three decades or less. That policy has made the globe’s biggest debtor a laggard in a key bond-market metric related to the average maturity of its securities. By this measure, the gap between the U.S. and its peers has never been wider.

With the Federal Reserve signaling plans to raise rates and U.S. deficits projected to grow, the Treasury’s policy means it’s missing out on a golden opportunity. The caretakers of the $13.4 trillion Treasuries market see it differently. For them, rolling out a longer maturity only sporadically would undermine the predictable approach to issuance that they’ve pursued since the 1970s, which they say ensures the reliability and ease of trading in the world’s benchmark debt market and saves taxpayers money.
‘Liquid Markets’

“The Treasury likes to see large, liquid markets, and something like a 50-year bond is not going to be particularly liquid,” said James Moore, head of investment solutions in Newport Beach, California, at Pacific Investment Management Co., which oversees about $1.5 trillion. “The Treasury is thinking about and balancing a multiplicity of objectives when they consider issuance, and liquidity and depth are some of them.”

The U.S. hasn’t exactly stood still. The average lifespan of the government’s debt is now about 69 months, up from 49 in December 2008, when it was ramping up short-term bill issuance as part of emergency spending during the financial crisis, Treasury data show.

Yet by a gauge known as modified duration, a measure of debt’s price sensitivity to interest-rate changes that rises with maturity, it’s still trailing global peers. Typically, bonds with longer duration gain more when rates fall, and suffer steeper losses when rates rise.
Gap Widens

For Treasuries, the figure is 6.2, compared with 8.9 for an index that tracks the sovereign securities of more than 20 other nations, Bank of America Merrill Lynch data show. This month, the gap between the two reached the widest since at least 2006. One of the starkest contrasts is with the U.K., which issues long-dated bonds for pensions and insurers. Its debt has a duration above 10, Bank of America data show.

It’s not just governments issuing ultra-long debt. Microsoft Corp. and Verizon Communications Inc. sold some in 2015 with 40-year maturities. The University of California issued 100-year obligations last year.

With $9 trillion of global bonds carrying negative yields, issuers have seen no shortage of demand for the deals. When Spain, which sought aid for its banks during the euro area’s debt crisis, offered a 3.45 percent coupon on its 50-year bond this month, it received more than 10.5 billion euros ($11.8 billion) in bids for the 3 billion euros issued, even as it faces elections for the second time in six months. The rate wasn’t much higher than the 2.62 percent yield on 30-year bonds the U.S. sold this month. Treasury 30-year securities yielded 2.62 percent as of 10:03 a.m. in London Monday.

Given the appetite for longer maturities and the prospect that the Fed will raise rates again in coming months, some analysts of U.S. debt management say it’s time to jump in.
‘Missed Opportunity’

“We do observe other countries doing this,” said Campbell Harvey, a finance professor at Duke University’s Fuqua School of Business in Durham, North Carolina, who’s testified to Congress on the nation’s borrowing policy. “If rates go up, it is a historic missed opportunity by the U.S.”

Senator Mark Warner, the ranking member of the securities, insurance, and investment subcommittee of the Banking Committee, agrees longer-term issuance is worth a shot.

“This is an academic discussion until we try it,’’ the Virginia Democrat said in an interview. “Longer-term debt doesn’t alleviate our balance-sheet burden, but it does remove some of the risk from interest-rate spikes.”
‘Some Limitations’

Treasury Counselor Antonio Weiss, responding to a question from Warner at an April 14 hearing, said the government has moved to extend maturities.

“There are some limitations to how quickly that can be done,” Weiss said. “They stem from the regular and predictable need for issuance, but also the fact that our deficit has come down so dramatically,” reducing issuance needs.

A Treasury spokesman, Rob Runyan, declined to comment beyond Weiss’s remarks.

The U.S.’s international counterparts don’t provide much of a model for a regular and predictable issuer.

France has issued 50-year bonds three times since 2005, and the 50-year security Belgium sold in April was its first of that maturity. Spain’s sale was its second foray into the ultra-long market, while Japan and China sell roughly once and twice a year, respectively.

In contrast, even the least-frequently auctioned U.S. debt — Treasury Inflation-Protected Securities — are offered at least three times a year. And the government is slow to add products. After the creation of TIPS in 1997, its next addition wasn’t until 2014, when it introduced floating-rate notes.

“Treasuries are different,” Weiss said in his testimony last month. “We don’t introduce new instruments and then withdraw them.”
Dealers’ Concern

There also may be pushback from Wall Street dealers worried about potentially getting stuck with unsold bonds at a time when regulation is making it costlier to keep securities on their books.

“Maturities greater than 30 years would only appeal to a small proportion of the user base that needs long duration,” said Jason Sable, a trader in New York at Mizuho Securities USA Inc., one of the 23 primary dealers that trade with the Fed. It could be “onerous on dealers who have the debt just sit on their balance sheets once these accounts are satiated.”
Committee’s Concern

The Treasury’s Borrowing Advisory Committee, which includes some dealers, voiced concern over that risk in 2011, when the department last asked the group to consider ultra-long bonds. The topic has been discussed several times at quarterly gatherings since.

The primary buyers of very long-dated debt — pensions and insurers — tend to prefer higher-yielding corporate bonds. Microsoft’s 40-year bond last year was priced to yield 1.8 percentage points above 30-year Treasuries. And other investors may deem ultra-long debt too perilous because of the steep losses they’d incur should yields rise.

“It’s unclear whether there would be strong and persistent demand for a 50-year bond,” said Amar Reganti, a fixed-income strategist in the asset-allocation group at GMO LLC in Boston and a former deputy director of the Treasury’s Office of Debt Management. “And if there wasn’t, it would challenge the Treasury’s regular and predictable issuance framework.”

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Fed Rate Hike Non Event?

May 23rd, 2016 5:38 am

Via WSJ:
By Min Zeng and
Mike Cherney
Updated May 22, 2016 9:31 p.m. ET

Stock and bond markets appear ready to absorb the next Federal Reserve rate increase without descending into turmoil, fund managers say, reflecting economic shifts and investor positioning since the last Fed move in December.

Fears of another market tantrum arose last week after Fed officials repeatedly warned that investors were underestimating the likelihood of a rise in the fed-funds rate at the central bank’s June 14-15 meeting. The 10-year Treasury yield posted its largest one-day rise this year on Wednesday following the release of minutes saying the Fed could raise rates next month if economic growth continues. Yields rise when prices fall.

Yet many portfolio managers say upheaval appears unlikely. One reason, they say, is that the dollar and oil are both offering markets much more comfort than they did as recently as last year.

After rising significantly over the past two years, the WSJ Dollar Index, which measures the greenback against a basket of currencies, is down 2.9% for 2016, relieving pressure on the earnings of large U.S. companies and the finances of many emerging-market nations that have borrowed in dollars. Oil has rallied 82% from its 2016 low amid supply disruptions, taking pressure off U.S. energy producers and likely limiting further ripple effects from the crude collapse.

A sharp selloff in stocks and bonds during the first six weeks of the year largely stemmed from fears the U.S. could be headed into recession. But several recent gauges of U.S. economic health, measuring industrial output, housing sales and consumer prices, have shown growing momentum. Wages have picked up after a long period of stagnant growth, but inflation broadly appears soft, likely giving the Fed room to raise rates only gradually.
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These factors, together with the declines over the past month in stock and bond prices, mean the market can handle a well-telegraphed rate increase, many investors say—the only kind most analysts believe the Fed would dare attempt.

“There is a lot of money globally chasing very few high-quality assets,” said Mark MacQueen, co-founder and portfolio manager at Sage Advisory Services Ltd., which oversees $12 billion. He said a quarter-point rise in the fed-funds rate likely won’t change that dynamic, and that he might buy U.S. government bonds if the Fed raises rates.

Concerns about a stock-market pullback in response to future rate increases often center on soft corporate earnings and extended valuations. But some analysts see signs in this year’s energy recovery that the picture could be brightening.

First-quarter earnings for U.S. companies were poor, but “that may have been a nadir,” said Ben Mandel, global strategist at J.P. Morgan Asset Management. He believes U.S. stocks could offer mid-single-digit annual returns by the end of this year. The S&P 500 index is up 0.4% so far in 2016.

Nor are investors overly worried about big price declines in U.S. government debt. Central banks in Europe and Japan have pushed their benchmark interest rates into negative territory in a bid to boost economic growth there, making U.S. Treasurys more attractive for foreign buyers. Demand from those investors is expected to keep prices on longer-term bonds steady, even as others sell short-term Treasurys, which are typically most sensitive to Fed policy.

In another sign of the improved market tone since January, U.S. corporate-bond sales—even those from risky, highly levered companies—have picked up in recent months. Corporate-debt sales largely came to a halt earlier in the year, as jittery investors refused to lend money amid the market turmoil. But the market has opened up again, allowing a relatively low-rated company like Dell Inc. to sell $20 billion of investment-grade debt last week, the fourth-largest corporate-bond deal on record.

Data from the Commodity Futures Trading Commission released Friday showed investors were growing more optimistic in certain parts of the market, underscoring the positive tone. Bullish bets by speculators on crude oil and long-term Treasurys increased while bearish bets declined, according to the data, which reflects positioning as of May 17.

Investors have readjusted their interest-rate expectations significantly in recent days. About a week ago, interest-rate futures priced in just a 4% chance that the Fed would raise rates in June, according to CME Group. But the odds rose to 26% by Friday.

The yield on the two-year Treasury note, highly sensitive to the Fed’s policy outlook, rose by 0.13 percentage point last week to settle at 0.888%, the biggest weekly increase since November. The WSJ Dollar Index rose 0.8% last week.

Fed Chairwoman Janet Yellen will speak at Harvard University on May 27 and on June 6 before the World Affairs Council of Philadelphia. The June speech will come just over a week before the Fed’s June policy meeting.

Not all investors are sounding the all clear. Despite the positive economic data in recent weeks, U.S. economic growth clocked in at a lackluster 0.5% in the first quarter. Concerns remain about the pace of economic growth in China, and a further slowdown there could reduce demand for commodities, lowering prices and renewing pressure on energy and mining firms. CFTC data show an uptick in bearish bets on the 10-year U.S. Treasury, whose yield has risen to 1.85% after earlier declines.

But David Donabedian, chief investment officer of Atlantic Trust Private Wealth Management, which had $27 billion of assets under management at the end of April, said any selloff likely would afford many investors the opportunity to hunt for value from beaten-down assets.

“No matter whether the Fed raises rates in June, July or later, the key point is that the Fed is in for a very slow pace of normalizing its interest-rate policy, which is not the stuff that would push stocks into a bear market,’’ he said.

Write to Min Zeng at [email protected] and Mike Cherney at [email protected]

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Rosengren on Fed Policy

May 23rd, 2016 5:29 am

Via the FT:

The US is on the verge of meeting most of the economic conditions the Federal Reserve has set to increase interest rates next month, according to a member of the rate-setting Federal Open Market Committee.

Eric Rosengren, the president of the Federal Reserve Bank of Boston, told the Financial Times he was getting ready to back tighter monetary policy after financial and economic indicators swung in a positive direction after the Fed’s policy meeting in March.

Until last week markets were putting extremely low odds on a summer rate increase, in part because of the dovish tone of Fed chair Janet Yellen’s last speech two months ago. That picture was transformed on Wednesday, as the Fed minutes from its April rate-setting meeting suggested it was preparing the ground for a second interest rate increase following the quarter point rise in December.

“I want to be sensitive to how the data comes in, but I would say that most of the conditions that were laid out in the minutes, as of right now, seem to be … on the verge of broadly being met,” said Mr Rosengren, who has a vote on rates this year as part of the regular rotation of regional Fed presidents on the FOMC.

To justify a move at its next policy meeting in June, the Fed set itself three tests: to see additional signs of a rebound in the economy in the second quarter, further strengthening in the jobs market and for inflation to carry on towards the Fed’s 2 per cent goal. While policymakers are divided over whether these conditions will all be met by next month, Mr Rosengren said he saw the preconditions for a June rise falling into place.

Mr Rosengren was one of the Fed doves last year but has recently become more bullish on the outlook.

His stance chimes with the findings of the latest FT survey of 53 leading economists which found that more than half — 51 per cent — expected the Fed to tighten monetary policy at one of its next two meetings. This was in stark contrast to market views as recently as the start of the month when concern over lacklustre global growth and choppy financial markets seemingly stayed the US central bank’s hand until 2017.

Recently markets have been more buoyant as oil prices rose, the dollar eased and US economic data gained strength.

Analysing the Fed’s three tests for a June move, Mr Rosengren said the central bank had set a “relatively low threshold” for improvement on the growth front given first-quarter gross domestic product expansion was at an annualised rate of just 0.5 per cent. While job growth in April slowed from the roughly 200,000 monthly average in the first quarter, hiring was still “well above” what was needed for a gradual tightening of the labour market, he added.

Mr Rosengren said the US was “making progress on getting to inflation at 2 per cent”, given the higher oil price, the depreciation of the dollar over the past two months, and the firming of the core personal consumption expenditures measure of inflation to a year-on-year rate of 1.6 per cent.

“The reason I am more confident is we are getting better data,” he said.

I want to be sensitive to how the data comes in, but I would say that most of the conditions that were laid out in the minutes, as of right now, seem to be … on the verge of broadly being met

The June 14-15 meeting of the FOMC takes place just a week before Britain’s referendum on its EU membership, but the vote should not stand in the way of US monetary policy changes unless it triggered a significant bout of market instability, Mr Rosengren said.

“Votes by themselves shouldn’t be a reason for altering monetary policy,” he said. “If we were experiencing significant changes in financial conditions that made us significantly alter the outlook going forward, that would be something that we should take into account.”

Mr Rosengren said demands in previous years for ultra-aggressive monetary stimulus had been vindicated as the US economy is springing forward with “a little more alacrity” than its trading partners. Now the picture is changing, however.

“Because we are closer to full employment and because we are closer to our inflation target I am more confident now that a more normalised situation makes sense,” he said.

The markets have been burnt by hawkish signalling from the Fed before — which partly explains why traders have been sceptical that the central bank will deliver anywhere near as much tightening as its policymakers’ March median forecasts suggested.

Going into last week investors were putting odds of just 4 per cent on a rate rise in June. Then came the Fed’s April minutes, and a strong signal that an increase will be an option at the June 14-15 rate-setting meeting.

“The reason they should believe this time is different is that the economic conditions are changing over this period,” Mr Rosengren said, referring to the spell since the Fed’s March meeting.

Financial markets have improved markedly since March, while the US consumer, which drives two-thirds of growth, has been showing greater verve, he explained. Private sector economists’ consumption forecasts for the second quarter were in the range of 3 per cent to 3.5 per cent, which points to broader growth of about 2 per cent, he argued.

“Stock markets globally have improved quite significantly. The data has been coming in better and not only in the United States but in many other parts of the world. Some of the headwinds we thought might be a significant problem as recently as March seem to be a little bit less of a significant problem as we go into June,” Mr Rosengren said.

With the fed funds rate still at roughly 35 basis points, “that is pretty low, given we are pretty close to full employment”, he said, while cautioning that he was not prejudging economic data that will emerge between now and the June meeting.

Mr Rosengren’s arguments for gradual monetary tightening are not confined to the labour market and inflation. He has been outspoken in warning about the possible side-effects from ultra-low interest rates in the property sector.

In Boston, as in many other big cities in the north-east and elsewhere, the main manifestation has been evident in rising commercial real estate prices. One way of reining in excesses in that sector is via regulatory tools, and the Fed last year issued guidance aimed at anchoring prudent lending standards in the industry.

But with non-bank financial institutions such as pension funds emerging as important drivers in the sector, the Fed’s supervisory weapons may not go far enough. Mr Rosengren said last November that if trends in the commercial property world continued unabated it could become an argument for a somewhat quicker pace of interest-rate increases by the Fed.

“I think we should continue to ask ourselves are we doing what we need to do to make sure that commercial real estate doesn’t grow to a point where it becomes a financial stability concern,” he said.

Additional reporting Eric Platt in New York

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Slow Growth in Europe

May 23rd, 2016 5:25 am

Via Bloomberg:

Growth in the euro area’s private sector unexpectedly slowed in May, signaling that the region won’t maintain the strong pace of expansion recorded at the start of the year.

A Purchasing Managers Index slipped to 52.9 from 53 in April, London-based Markit Economics said on Monday. Economists surveyed by Bloomberg predicted an increase to 53.2. A gauge for services activity held at 53.1, while one for manufacturing fell to 52.4 from 52.6.

The 19-nation economy expanded 0.5 percent in the first quarter, the fastest pace in a year. With inflation still absent despite several rate cuts below zero and expansions of asset-purchase programs, the European Central Bank has become more vocal in urging governments to do their part in underpinning growth.

“The robust pace of economic growth seen in the first quarter will prove temporary,” said Chris Williamson, chief economist at Markit. “The survey therefore paints a picture of a region stuck in a low-growth phase, managing to eke out frustratingly modest output and employment gains despite various ECB stimulus ‘bazookas,’ a competitive exchange rate and households benefiting from falling prices.”

New orders grew at the weakest pace since January last year, pointing to subdued output growth next month at best, according to the report. Average selling prices continued to decline. Still, employment rose for a 19th month.

While PMIs for Germany and France signaled accelerating private-sector growth, expansions elsewhere in the region cooled, Markit said. Final data for May will be published starting June 1.

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Periphery Spreads Attractive?

May 19th, 2016 10:11 pm

Via FT:

Eurozone “periphery” spreads are attractive at the long end, says UniCredit.

At mid-session on Thursday, Italian and Spanish 10-year government bonds yielded about 132 basis points and 142bp more, respectively, than the equivalent-maturity German Bund.

These differences, or spreads, should contract because this part of the peripheral bond market is overly pessimistic, says the Italian bank.

It analyses three risk variables that it claims “account for over 50 per cent of the spread daily volatility over the past two years”.

They are the Greek government bond/Bund spread, which can be used as a measure of European Monetary Union stress; the VStoxx, which is an implied volatility gauge of European equity tensions; and the price of three-month euro/sterling option volatility, which tracks “Brexit” fretting.

“There is a clear divergence of periphery credit spreads relative to our explanatory variables,” says UniCredit.

“Even more important, the 10-year spread is more than two standard deviations away from the fair value (and the same holds true for the 30-year).”

The two-year spread does not show any meaningful mispricing on this basis, the bank adds.

The UniCredit spread-tightening play thus assumes two things.

First, the UK does not vote to leave the EU. If the opposite happened, the prospect of other countries agitating to depart would boost Bunds and clobber peripherals.

Second, Greece reaches a fresh agreement with its creditors by July.

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Yield Whores Pile Into Bond Funds

May 19th, 2016 10:08 pm

Via FT:

The demand for yield accelerated in the past week as investors piled into high-grade US corporate bond funds, providing a big boost for companies seeking to sell debt.

US funds purchasing investment-grade company debt attracted $1.1bn of fresh money in the week to May 18, the 11th consecutive week of inflows, according to data provider Lipper. The new investments pushed inflows since the beginning of the year to more than $10bn.

The plunge in yields on corporate and sovereign bonds in Europe and Asia — the value of bonds with a negative yield is nearly $10tn, according to Fitch — has sent investors racing into the US market.

“There is money pouring into bond markets,” said Bob Michele, chief investment officer at JPMorgan Asset Management. “The hunt for yield is very high.”

Trading desks in the US have received a wave of inquiries from sovereign wealth funds, central banks and insurance groups for US credit, BNP Paribas credit strategist Mark Howard said.

Investors are looking “far and wide for yield”, Mr Howard said. He described the interest from foreign buyers as a “powerful technical dynamic. [These] non-traditional investors are becoming very invested in this market.”

The inflows have suppressed corporate borrowing costs at a time when new debt issuance is accelerating, with multibillion-dollar sales from US computer manufacturer Dell, electric utility Southern Company and pharmaceuticals group AbbVie drawing significant orders. High investor demand has allowed companies to issue debt at lower yields, though US yields are still more attractive than in other parts of the world.

More than $900bn of corporate bonds have been sold in 2016, including $411bn in the US, according to Dealogic. Seven of the 20 largest bond offerings of the year have been completed this month alone.

The flows have been concentrated in investment grade paper. By contrast, junk bond portfolio managers have been forced to manoeuvre an erratic series of redemptions and inflows. In the latest week, these funds counted $1.1bn of fresh capital, partially reversing two straight weeks of outflows.

Meanwhile, equity fund managers saw the breakneck pace of withdrawals slow, with $5.8bn pulled out in the past week, separate flows tracked by EPFR showed. The outflows were spread across developed and emerging markets with unexpectedly hawkish minutes from the Federal Reserve providing added pressure.

“Hopes of a one-and-done US rate hiking cycle took a knock in mid-May with the release of the Fed’s April minutes, dropping an already chilly investment climate for emerging markets by another degree or two,” said Cameron Brandt, director of research for EPFR.

Emerging funds in Europe, the Middle East and Africa extended their longest outflow streak since January while developed Europe stock funds suffered their 15th consecutive week of redemptions.

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Leveraged Loans Levitating Ludicrously

May 19th, 2016 10:03 pm

Via FT:

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Bond Binge

May 19th, 2016 4:47 pm

Via Bloomberg:

‘More Is Coming’ in U.S. Bond Binge, BlackRock’s Rieder Says
2016-05-19 16:10:29.308 GMT

By Claire Boston
(Bloomberg) — Bond buyers who are exhausted after Dell
Inc.’s $20 billion offering need to recover fast, according to
Rick Rieder at BlackRock Inc.
“More is coming,” Rieder, BlackRock’s chief investment
officer for global fixed income, said in a television interview
on Bloomberg <GO> Thursday. “We’re going to have a heavy year of
investment-grade issuance.”
Record low rates worldwide have left investors globally
searching for yield, Rieder said. That’s allowed “not scary”
companies to issue debt to help boost shareholders at a time
when profits have struggled to grow, he said.
The U.S. Federal Reserve’s main borrowing rate is 0.5
percent, down from a 25-year average of 2.9 percent, while some
rates in Japan and Europe are negative.
Rieder said the mergers and acquisitions boom is also
likely to continue as companies take advantage of cheap debt to
gobble up competitors in search of cost efficiencies.
“We will create more oligopolies across industries, quite
frankly, because you can create some pricing power that way and
you can bring down your cost base,” Rieder said. “There’s more
of that to come.”
Dell’s bond sale this week to help finance its $67 billion
takeover of EMC Corp. was the biggest this year since Anheuser-
Busch InBev NV sold $46 billion of notes in January. The
computer maker’s sale pushed investment-grade issuance for May
past $100 billion.

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Data Analysis

May 19th, 2016 9:03 am

Via Stephen Stanley at Amherst Pierpont Securities:

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Credit Pipeline

May 19th, 2016 6:05 am

Via Bloomberg:

IG CREDIT PIPELINE: 2 to Price as List Grows Longer Still
2016-05-19 09:45:25.442 GMT

By Robert Elson
(Bloomberg) — Set to price today:

* Kallpa Generación S.A. (KALLPA) Baa3/na/BBB-, to price $350m
144a/Reg-S 10Y, via managers CS/Creditcorp/MS/Sco; guidance
+325 area
* Export Development Canada (EDC) Aaa/AAA, to price $1b Global
5Y, via BNP/BAML/GS/Sco; guidance MS +22

LATEST UPDATES

* Tesla Motors (TSLA); automatic debt, common stk shelf
* Debt may convert to common stk
* Axis Bank (ASXBIN) Baa3/BBB-; hires banks for possible green
bond
* Discovery Communications (DISCA) Baa3/BBB-; may revisit bond
market this yr, BI says
* 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
* 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

MANDATES/MEETINGS

M&A-RELATED

* Abbott (ABT) A2/A+; ~$5.7b St. Jude buy, ~$3.1b Alere buy
* $17.2b bridge loan commitment (April 28)
* Air Liquide (AIFP) –/A+; ~$13.4b Airgas buy
* $10.7b financing incl bonds, EU3b-3.5b equity (April 26)
* Sherwin-Williams (SHW) A2/A; ~$9.3b Valspar buy
* $8.3b debt financing expected (March 20)
* Nasdaq (NDAQ) Baa3/BBB; Marketwired buy
* $1.1b bridge (March 10)
* Mylan (MYL) Baa3/BBB-; ~$9.9b Meda buy
* $10.05b bridge (Feb 17)
* Dominion (D) Baa2/A-; ~$4.4b Questar buy
* $1.5b issuance expected to fund deal (Feb 1)
* Shire (SHPLN) Baa3/BBB-; ~$32b Baxalta buy
* $18b loan to be refinanced via debt issuance (Jan 18)
* Walgreens Boots (WBA) Baa2/BBB; ~$17.2b Rite-Aid buy
* $7.8b bridge, $5b TL, debt shelf (Jan 7)
* Molson Coors (TAP) Baa2/BBB-; ~$12b MillerCoors buy
* $9.3b bridge (Dec 17)
* Teva (TEVA) Baa1/BBB+; ~$40.5b Allergan generics buy
* $22b bridge; $5b TL commitment (Nov 18)
* Duke Energy (DUK) A3/A-; $4.9b Piedmont Natural buy
* $4.9b bridge (Nov 4)
* Aetna (AET) Baa1/A; ~$28.9b Humana buy
* $13b bridge (August 28)
* Anthem (ANTM) Baa2/A-; ~$50.4b Cigna buy
* $26.5b bridge (July 27)

SHELF FILINGS

* 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)

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