Across the Curve

Credit Pipeline

August 24th, 2016 6:08 am

Via Bloomberg:

IG CREDIT PIPELINE: SEK to Price Today, DBJJP Tomorrow
2016-08-24 09:35:02.278 GMT

By Robert Elson
(Bloomberg) — Set to price today

* Swedish Export Credit (SEK) Aa1/AA+, to price $bench Global
3Y, via managers C/JPM/Nom/RBC; guidance MS +18 area

* Expected to price Thursday
* Development Bank of Japan (DBJJP) A1/A+, to price 2-part
144a/Reg-S deal, via BAML/Barc/GS/Nom
* $500m minimum 5Y, IPT MS +58 area
* $500m minimum 10Y, IPT MS +62 area

LATEST UPDATES

* Pfizer (PFE) A1/AA, said to be near $14b deal to buy
Medivation (MDVN)
* Pfizer expects to finance the deal with existing cash
* Couche-Tard (ATDBCN) Baa2/BBB, expects to sell USD bonds
related to ~$4.4b acquisition of CST Brands (CST) Ba3/BB
* NongHyup Bank (NACF) A1/A+, mandates C/CA/HSBC/JPM/Nom/UBS
to hold investor meetings Aug. 29-Sept. 1; 144a/Reg-S deal
may follow
* Enbridge (ENBCN) Baa2/BBB+, files $7b mixed shelf Aug.22;
$350m maturies Oct. 1
* General Electric Company’s plan to take on additional $20b
of debt could pressure ratings, Moody’s says
* Industrial Bank of Korea (INDKOR) Aa2/AA-, mandates HSBC/Nom
for roadshow from Aug. 22; 144a/Reg-S deal may follow
* Cabot Corp (CBT) Baa2/BBB, filed debt shelf; last priced a
new deal in 2012, has $300m maturing Oct. 1
* Israel Electric (ISRELE) Baa2/BBB-; said to hire C, JPM for
at least $500m bond sale in 4Q

MANDATES/MEETINGS

* Sumitomo Life (SUMILF) A3/BBB+; investor mtg July 19
* Woori Bank (WOORIB) A2/A-; mtgs July 11-20

M&A-RELATED

* Analog Devices (ADI) A3/BBB; ~$13.2b Linear Technology acq
* To raise nearly $7.3b debt for deal (July 26)
* Bayer (BAYNGR) A3/A-; said to review Monsanto (MON) A3/BBB+
accounts as bid weighed (Aug. 4)
* $63b financing said secured w/ $20b-$30b bonds seen
* Danone (BNFP) Baa1/BBB+; ~$12.1b WhiteWave (WWAV) Ba2/BB
* Co. Says deal 100% debt-financed, expects to keep IG
profile (July 7)
* Thermo Fisher (TMO) Baa3/BBB; ~$4.07b FEI acq
* $6.5b loans, including $2b bridge (July 4)
* Zimmer Biomet (ZBH) Baa3/BBB; ~$1b LDR acq
* Plans $750m issuance post-completion (June 7)
* Air Liquide (AIFP) A3/A-; ~$13.2b Airgas acq
* Plans to refi $12b loan backing acq via USD/EUR debt
(June 3)
* Great Plains Energy (GXP) Baa2/BBB+; ~$12.1b Westar acq
* $8b committed debt secured for deal (May 31)
* Abbott (ABT) A2/A+; ~$5.7b St. Jude buy, ~$3.1b Alere buy
* $17.2b bridge loan commitment (April 28)
* Sherwin-Williams (SHW) A2/A; ~$9.3b Valspar buy
* $8.3b debt financing expected (March 20)
* Shire (SHPLN) Baa3/BBB-; ~$35.5b Baxalta buy
* Closed $18b Baxalta acq loan (Feb 11)

SHELF FILINGS

* IBM (IBM) Aa3/AA-; automatic mixed shelf (July 26)
* Nike (NKE) A1/AA-; automatic debt shelf (July 21)
* Potash Corp (POT) A3/BBB+; debt shelf; last issued March
2015 (June 29)
* Tesla Motors (TSLA); automatic debt, common stk shelf (May
18)
* Debt may convert to common stk
* Reynolds American (RAI) Baa3/BBB filed automatic debt shelf;
sold $9b last June (May 13)
* Statoil (STLNO) Aa3/A+; 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

* Visa (V) A1/A+; CFO says will issue $2b debt for buybacks by
yr end (July 21)
* Saudi Arabia (SAUDI); said to have hired 6 banks to lead
first intl bond sale (July 14)
* Investment Corp of Dubai (INVCOR); weighs bond sale (July 4)
* Alcoa (AA) Ba1/BBB-; upstream entity to borrow $1b (June 29)
* GE (GE) A3/AA-; may issue despite no deals this yr (June 1)
* Discovery Communications (DISCA) Baa3/BBB-; may revisit bond
market this yr, BI says (May 18)
* American Express (AXP) A3/BBB+; plans ~$3b-$7b term debt
issuance (April)

Posted in Uncategorized | 1 Comment »

Regional Hawks

August 23rd, 2016 4:53 pm

Via Bloomberg:

Fed’s Regional Bank Boards Increase Pressure for Rate Hike (1)
2016-08-23 19:07:25.335 GMT

By Christopher Condon
(Bloomberg) — The boards of directors at eight of the 12
regional Federal Reserve banks sought last month to increase the
rate on direct loans from the Fed to 1.25 percent from 1
percent, according to details released by the U.S. central bank
Tuesday.
The votes mark the first time since policy makers raised
the benchmark federal funds rate in December that a majority of
the Fed’s regional boards backed a discount-rate increase. The
votes can be a signal of whether a bank’s president favors a
change in the main policy rate.
“Federal Reserve Bank directors generally indicated that
economic activity had continued to expand at a moderate pace,”Preview
the July discount-rate minutes showed. “Several directors cited
improvements in the housing sector, as well as steady or
increasing levels of consumer spending.”
Directors in Dallas and Philadelphia voted for an increase,
joining those from Boston, Cleveland, Kansas City, Richmond, San
Francisco and St. Louis — who had also favored a rate increase
when they met in June. Presidents from those banks backing a
discount-rate move included all four who currently hold rotating
votes in the policy-making Federal Open Market Committee.
Directors in New York, Minneapolis, Chicago and Atlanta
voted to keep the rate unchanged. Those officials “judged that
the economic outlook and below-target inflation supported
maintaining the current accommodative stance of monetary
policy,” according to minutes.
New York’s William Dudley is the only voting president from
that group. He holds a permanent vote on the FOMC.
The discount rate is the interest rate charged to banks and
depository institutions for loans received from Fed’s lending
facility, and is separate from federal funds rate, the central
bank’s primary policy tool.
The Board of Governors in Washington must approve any
change in the discount rate. They didn’t approve any change when
they met last month and have left it at 1 percent since
December.

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JPMorgan Duration Survey

August 23rd, 2016 7:52 am

Via Bloomberg:

JPMorgan Treasury All-Client, Active Surveys Remain Net Long
2016-08-23 11:26:51.214 GMT

By Stephen Spratt
(Bloomberg) — In week ended Aug. 22, all-client survey
continues to show net longs, now around 14 percentage points
longer than its 1 yr average.

* Active client survey also remains net long by 14 percentage
points; neutrals rise, erasing last month’s drop, returning
to 60

* All clients (Aug. 22 vs Aug. 15)
* Long: 25 vs 31
* Neutral: 64 vs 52
* Short: 11 vs 17

* Active clients
* Long: 30 vs 44
* Neutral: 60 vs 33
* Short: 10 vs 22

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Tight Range in Stocks Too

August 23rd, 2016 6:57 am

This via Chris Low at FTN Financial:

Yesterday, the Dow dropped 23 points, or 0.12%. That would not normally be noteworthy, except it marked the end of the quietest period in US stocks in 21 years. As the WSJ notes, only five of the past 30 days saw the S&P 500 move more than 0.5% in either direction. The unusually quiet period is even more remarkable as it follows years of unusual volatility. The paper notes prior periods of very low volatility were in the summer of 2014, which ended with panic selling in October; early 2011, before S&P stripped the US of its triple-A status to protest a Congressional budget battle; and January 2007, before two Bear Stearns hedge funds collapsed, marking the start of the credit crunch.

Periods of low volatility indicate a lack of market-moving surprises. They can linger for months and end only when something catches investors looking the wrong way. In other words, this is not a sell signal in the traditional sense. It does, however, indicate a lack of surprises in the past month all the more remarkable given the nonstop barrage of crazy events pummeling investments since 2007. (As someone recently said, so many “other shoes” have dropped there must have been a centipede involved somewhere.) Before buying stocks in this environment, investors should ask themselves if they think the craziness is over. If not, the market is likely due for a correction.

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Tight Range in Treasuries

August 23rd, 2016 6:51 am

Thanks to Steve Feiss (@stevefeiss)at Government Perspective for the heads up on this one.

Via Bloomberg:
August 22, 2016 — 10:57 PM EDT
Updated on August 23, 2016 — 4:27 AM EDT

Traders wait for policy clues when Fed chief speaks Aug. 26
Futures pricing shows odds of rate increase this year at 51%

 

Treasury 10-year notes are moving in their tightest monthly trading range since 2006 before Federal Reserve Chair Janet Yellen’s speech later this week that may provide traders with clues on whether the central bank will raise interest rates this year.

Benchmark 10-year yields haven’t closed above 1.6 percent since June 23, the day the U.K. voted on its membership of the European Union. The Fed chief is scheduled to speak at an annual symposium in Jackson Hole, Wyoming, on Aug. 26. Investors wait to see if she joins Vice Chairman Stanley Fischer and other Fed colleagues in flagging that interest rates may still rise in 2016.

“The market is in a bit of a holding pattern for the moment ahead of Yellen’s speech,” said Adam Donaldson, head of debt research in Melbourne at Commonwealth Bank of Australia. “The market is not quite ready to push through the 1.60 percent ceiling that has prevailed for Treasuries since Brexit.”

Benchmark 10-year notes yielded 1.56 percent as of 9:25 a.m. in London, according to Bloomberg Bond Trader data. The price of the 1.5 percent security due in August 2026 was 99 15/32. The yield has been in a 15 basis point, or 0.15 percentage point, range this month, the narrowest on a closing-price basis since February 2006.

Ten-year yields above 1.6 percent are attractive, according to CBA’s Donaldson.
Fed Outlook

There’s a 51 percent chance the Fed will increase rates this year, up from a 36 percent probability at the end of July, according to data compiled by Bloomberg based on fed fund futures.

The Treasury is scheduled to auction $26 billion of two-year notes Tuesday, followed by a sale of $34 billion of five-year securities Wednesday and $28 billion of seven-year debt a day later. It also plans to sell $13 billion of two-year floating-rate notes Wednesday.

The August 2018 notes due to be sold yielded 0.765 percent in pre-auction trading, compared with 0.76 percent at a previous two-year debt sale July 25.

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Some Corporate Bond Stuff

August 23rd, 2016 6:40 am

Via Bloomberg:

IG CREDIT: Spreads Ease Back From Tightest Levels of the Year
2016-08-23 10:25:14.960 GMT

By Robert Elson
(Bloomberg) — Secondary IG trading ended with a Trace
count of $10.3b vs $9b Friday, $11.5b the previous Monday. 10-
DMA $13.5b.

* 144a trading added $1.3b of IG volume vs $966m Friday, $1.3b
last Monday

* The most active issues:
* SHBASS 2.40% 2020 was 1st with client and affiliate
flows accounting for 92% of volume
* AET 1.90% 2019 was next with dealer-to-dealer trades
taking 76% of volume; client selling took 23%
* ORCL 2.65% 2026 was 3rd with client and affiliate flows
taking 89% of volume; client selling near buying
* STANLN 2.10% 2019 was most active 144a issue with client and
affiliate flows taking 92% of volume; client selling near 3x
buying

* Bloomberg US IG Corporate Bond Index OAS at 142 vs 141.9, a
new low for 2016
* 2016 high/low: 220.8, a new wide since Jan. 2012/141.9
* 2015 high/low: 182.1/129.6
* 2014 high/low: 144.7/102.3

* BofAML IG Master Index at +141 vs +140, a new low of 2016
* 2016 high/low: +221, the widest level since June
2012/+140
* 2015 high/low: +180/+129
* 2014 high/low: +151/+106, tightest spread since July
2007

* Standard & Poor’s Global Fixed Income Research IG Index
unchanged at +190, a new low for 2016
* +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 +567 vs +562, a new low YTD; +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 71.8 vs 70.6; 69.9, a new low
YTD was seen Aug.18
* 2016 high/low 124.7/69.9
* 124.7, a new wide since June 2012 was seen 2/11/2016
* 2014 high/low was 76.1/55.0, the low for 2014 and the
lowest level since Oct 2007

* Current market levels vs early Monday, Friday:
* 2Y 0.746% vs 0.785% vs 0.717%
* 10Y 1.563% vs 1.585% vs 1.541%
* Dow futures +47 vs -2 vs -50
* Oil $46.87 vs $47.72 vs $48.07
* ¥en 100.21 vs 100.65 vs 100.12

* U.S. IG BONDWRAP: Light Calendar Sets In; Two Domestics To
Price
* August volume $109.44b; YTD Volume $1.132t

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FX

August 23rd, 2016 6:34 am

Via Marc Chandler at Brown Brothers Harriman:

Dollar Fades Ahead of Yellen

• During the North American session, the US reports August Markit manufacturing PMI and Richmond Fed manufacturing index, as well as July new home sales
• Flash eurozone PMIs for August were reported
• UK CBI reported manufacturing orders for August
• Turkey’s central bank is expected to cut the overnight lending rate 25 bp to 8.5% whilst keeping all other rates steady; Hungary’s central bank is expected to keep rates steady

The dollar is broadly softer against the majors.  Kiwi and sterling are outperforming while the Norwegian krone and the Swiss franc are underperforming.  EM currencies are broadly firmer.  KRW and TWD are outperforming while MYR and RON are underperforming.  MSCI Asia Pacific was flat, even with the Nikkei falling 0.6%.  MSCI EM is up 0.1%, with Chinese markets rising 0.2%.  Euro Stoxx 600 is up 0.9% near midday, while S&P futures are pointing to a higher open.  The 10-year UST yield is up 2 bp at 1.56%.  Commodity prices are mostly lower, with oil down 1%, copper down 0.3%, and gold flat.  

Markets are quiet ahead of Yellen’s speech, as the summer doldrums take hold.  During the North American session, the US reports August Markit manufacturing PMI and Richmond Fed manufacturing index, as well as July new home sales.  There are no Fed speakers ahead of Chair Yellen’s Jackson Hole speech.  She is slated to talk at 10 AM ET on Friday, and we expect her to take a similar tone to Dudley and Fischer.

Yet the recent dollar bounces from hawkish Fed comments have been fleeting.  We saw this with Dudley last week and now Fischer this week.  Can Yellen break the pattern?  As we’ve noted before, the dollar has softened despite the steady recovery in Fed tightening expectations.  The implied yield on the December Fed funds futures contract stands at 0.50%, the highest since June 9.  

Flash eurozone PMIs for August were reported.  The eurozone composite PMI has been unusually steady.  It has been between 53.0 and 53.2 since February.  The August composite came in at 53.3 vs. 53.1 expected and 53.2 in July.  Manufacturing was 51.8 vs. 52.0 expected and services was 53.1 vs. 52.8 expected.  Looking at the country breakdown, Germany’s August composite came in at 54.4 vs. 55.1 expected and 55.3 in July.  Manufacturing was the expected 53.6 and services was 53.3 vs. 54.4 expected.  Elsewhere, France’s August composite came in at 51.6 vs. 50.4 expected and 50.1 in July.  Manufacturing was 48.5 vs. 48.8 expected and services was 52.0 vs. 50.5 expected.  

UK CBI reported manufacturing orders for August.  Total orders came in at -5 vs. -10 expected, while export orders rose to a 2-year high of -6.  CBI noted that the readings are a “tentative sign that sterling’s depreciation is starting to filter through.”  So far, the UK data since the Brexit vote have come in fairly strong.  The first print for UK Q2 GDP will be reported Friday.  Of course, Q2 is old news but it will be important to see what sort of momentum the UK economy had going into the Brexit vote.  Still, the lack of significant economic impact so far suggests that the BOE will take a wait and see approach at its September 15 meeting.

Overnight, RBNZ Governor Wheeler said while easing is still likely, he saw no need for rapid rate cuts.  With two policy meetings left this year, this suggests no move on September 22 followed by a 25 bp rate cut on November 10.  The Kiwi is the top performing major currency today, up nearly 1% and testing the year’s high near .7340.  While the RBNZ doesn’t target the currency, Wheeler cannot be happy with ongoing Kiwi strength.    

Turkey’s central bank is expected to cut the overnight lending rate 25 bp to 8.5% whilst keeping all other rates steady.  CPI rose 8.8% y/y in July, the highest since February and back above the 3-7% target range.  New Governor Cetinkaya has been very cautious in narrowing the rates corridor, and we think an outright cut in the benchmark rate will be difficult if the current upward inflation trajectory remains in place.  Last Friday, Fitch kept Turkey’s BBB- rating but moved the outlook to negative from stable.  We felt a downgrade to BB+ was warranted, but the negative outlook keeps that risk alive.

Hungary’s central bank is expected to keep rates steady at 0.90%.  Further rate cuts seem unlikely for now, but other unconventional measures are possible in H2 if the economic outlook worsens.  CPI came in at -0.3% y/y in July and is well below the 2-4% target range.  GDP rose 2.6% y/y in Q2, and the 4-quarter average of 2.3% is the lowest since Q1 2014.

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Might There Be A Whiff of Wage Inflation Coursing Through the Macroeconomic Air?

August 23rd, 2016 6:28 am

If I had more space in the title I would have subtitled the piece “Take That Thomas Piketty”! Anyway this is a long piece via the WSJ which chronicles wage gains at the low end of the labor market and posits that companies companies can benefit from improved worker morale as well as  from public perceptions of a benevolent company.

Via the WSJ:
By Eric Morath and
Julie Jargon
Aug. 23, 2016 5:30 a.m. ET
0 COMMENTS

U.S. companies are giving raises to more of the nation’s lowest-paid workers, and they are eager to trumpet the news.

For Americans in the bottom quarter of the income scale, who were left behind for much of the expansion, pay is rising at the fastest rate since the recession.

The gains appear to be driven by more competition for workers, minimum-wage increases and initiatives by companies from McDonald’s Corp. to Nationwide Mutual Insurance Co. to J.P. Morgan Chase & Co., who have proudly declared that they would give their lowest-paid workers a boost.

While higher wages typically increase a company’s costs, they can make it easier for companies to attract quality recruits and stem turnover, and some experts say the potential payoffs can extend beyond dollars and cents.

In the second quarter, weekly wages for full-time workersin the 25th percentile, those making about $13 an hour, were up 3.1% from a year earlier, according to Labor Department data. That’s the biggest increase since 2009 and exceeds the growth rate for median earners, or those making about $20 an hour for full-time work.

The raises coincide with a decline in available workers for what are often less desirable jobs. The jobless rate has held at or below 5% this year, and the number of available workers per job opening is hovering near a 15-year low.

The gains at the bottom come alongside broader pay increases; in July, wages for all private-sector workers matched their strongest annual rate of growth in seven years.

The raises aren’t being quietly slipped into paychecks. Instead, large employers are setting a public example, putting pressure on competitors to follow suit and reaping ancillary benefits in the form of good will from employees, customers and investors.

J.P. Morgan Chase Chief Executive Jamie Dimon used an op-ed piece in the New York Times last month to announce that his company would increase minimum pay for 18,000 workers to at least $12 an hour.

Starbucks Corp. Chief Executive Howard Schultz used a recent letter to employees—published on the company’s public website—to tell workers about a minimum 5% raise this year. McDonald’s, Wal-Mart Stores Inc. and Gap Inc. have made similar moves in recent years.

Nationwide said last September that it was increasing the minimum wage for its lowest-paid workers to $15 an hour from $10.50. About 900 workers at call centers in Des Moines, Iowa, and San Antonio got raises.

Competitive pressures and low unemployment in those cities was a factor, said Gale King, Nationwide’s chief administrative officer.

“We knew our associates could walk out the door and find a job tomorrow,” she said. By raising pay above the median wage for similar work in the area, Nationwide says it can attract better employees to serve customers.

The result: Turnover at the call centers has dropped and internal surveys show employee satisfaction has improved, even among workers who didn’t receive a raise, Ms. King said.

The companies say increasing pay at the bottom of the scale can be a smart financial decision, leading to a more a stable employment base and lower hiring and training costs. It can also be a wise public-relations move.

“Baristas, bank tellers, these are people customers see as the face of the brand,” said Kirsten Davidson, head of employer brand at job-rating website Glassdoor. “If a company is not talking about pay raises for those employees, that’s a huge lost opportunity.”

Such pay increases also hint at a corporate shift toward more profit-sharing, said Princeton economist Alan Krueger, a former economic adviser to President Barack Obama.

“It shows company wage policy is not fully dictated by the market,” said Mr. Krueger. “That’s one of those myths that the labor market is purely set by supply and demand.” A solely market-driven company would set different wages in every city, not announce nationwide raises, he said.

Raises for lower-paid workers can make customers, and even investors, feel better about a company. That can be especially important for businesses targeted by protesters demanding a $15-an-hour national minimum wage.

Weekly wages in the leisure and hospitality industries, including restaurants, are advancing at nearly the same rate as for information workers, who earn three times as much, Labor Department statistics show.

Research firm TDn2K says turnover among hourly restaurant workers hasn’t decreased since September 2013, and that turnover among restaurant managers is at its highest level in more than a decade.

“If you ask franchisees what the biggest issue they have right now is, it’s finding people,” Dunkin Brands Group Inc. Chief Executive Nigel Travis told investors last month.

In some cases, the announced raises will help keep workers above minimum wages that are climbing as new laws take effect. Since the start of 2014, 26 states have raised their pay floors, including California and New York, where lawmakers this year put minimum wages on a path to reach $15 an hour. The federal rate of $7.25 an hour has held steady since 2009.

Better pay for workers can lead to higher prices for consumers. Starbucks said last month it would raise the prices of certain drinks by as much as 30 cents. Mr. Travis said many Dunkin franchises also have increased prices.

Last year, McDonald’s raised workers’ pay by at least $1 an hour more than the prevailing local minimum wage at the roughly 1,500 restaurants it owns in the U.S. The company’s lowest pay rate will reach more than $10 an hour this year.

Finance Chief Kevin Ozan said last month that crew turnover is down as a result. “I think it’s fair to say labor pressures will likely continue in a lot of countries around the world, including the U.S.,” he said.

Write to Eric Morath at [email protected] and Julie Jargon at [email protected]

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UK Investors Crave Duration

August 23rd, 2016 6:15 am

Yields are at the lowest levels since man first learned to walk erect and investors are craving more duration. Tis a world gone mad I say.

Via Bloomberg:
August 23, 2016 — 5:53 AM EDT

Market makers also prefer longer-maturity gilts, DMO says
Consultation follows failed QE operation by BOE 2 weeks ago

 

Investors’ appetite for longer-dated U.K. bonds shows no signs of fading, and they just told the government debt office they want more.

Gilt market makers and investors expressed a preference for long-dated debt at both sales via banks planned in the fourth quarter, according to the minutes of meetings they had with officials of the U.K. Debt Management Office released on Tuesday. Some investors called for bonds of more than 50 years of maturity to be put on sale.

The DMO said the existing security due in 2065 was the most preferred gilt for sale by market makers and investors for the October transaction, while there were “isolated calls” from both groups for the launch of a new gilt maturing in 2070 or beyond. For index-linked securities, the most popular choice among market makers was a re-opening of the inflation-linked gilt due in 2065.

In the meetings Monday, market makers also strongly supported re-openings of the July 2047 gilt at conventional sales in the fourth quarter, “with some attendees suggesting it should be launched (and re-opened) via auction in sizes larger than the prevailing average size for long conventional auctions,” according to the DMO. Investors also supported re-openings of that security.

The gathering was aimed at gauging the market’s view on its choice of gilts for issuance in the fourth quarter of 2016. The regularly scheduled consultation comes two weeks after the Bank of England failed to attract enough sellers of long-dated bonds in the first week of its expanded quantitative-easing program. Yields on 10- and 30-year gilts fell to record lows after the uncovered transaction.
BOE Buying

The BOE is scheduled to buy another 1.17 billion pounds ($1.54 billion) of long-dated gilts Tuesday. Despite the shortfall two weeks ago, subsequent purchases of shorter-maturity bonds drew an abundance of offers, and its second reverse auction for long-dated debt beat its purchase target on Aug. 16.

While last week’s buying of the longest bonds “was successful, a government auction of gilts the following day helped,” analysts at UniCredit Bank in Milan wrote in a note to clients Tuesday. “This week there will be no new issuance to help, which may mean investors will be less willing to sell to the BOE.”

The central bank is trying to ward off an economic slump by injecting more money into the economy through a bond-buying program after signs that Britain’s decision to leave the European Union is starting to hit confidence and business activity.

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Credit Pipeline

August 23rd, 2016 6:11 am

Via Bloomberg:

IG CREDIT PIPELINE: 2 Set to Price as List Grows Longer
2016-08-23 09:57:42.538 GMT

By Robert Elson
(Bloomberg) — Set to price today

* European Investment Bank (EIB) Aaa/AAA, to price $bench
Global 5Y, via managers BAML/HSBC/JPM; spread set at MS +27
* Hyundai Capital Services (HYUCAP) Baa1/A1, to price $bench
144a/Reg-S 3Y, via BAML/BNP/HSBC/MUFG; guidance +105 area

LATEST UPDATES

* Couche-Tard (ATDBCN) Baa2/BBB, expects to sell USD bonds
related to ~$4.4b acquisition of CST Brands (CST) Ba3/BB
* NongHyup Bank (NACF) A1/A+, mandates C/CA/HSBC/JPM/Nom/UBS
to hold investor meetings Aug. 29-Sept. 1; 144a/Reg-S deal
may follow
* Enbridge (ENBCN) Baa2/BBB+, files $7b mixed shelf Aug.22;
$350m maturies Oct. 1
* General Electric Company’s plan to take on additional $20b
of debt could pressure ratings, Moody’s says
* Pfizer (PFE) A1/AA, said to be near $14b deal to buy
Medivation (MDVN)
* Industrial Bank of Korea (INDKOR) Aa2/AA-, mandates HSBC/Nom
for roadshow from Aug. 22; 144a/Reg-S deal may follow
* Cabot Corp (CBT) Baa2/BBB, filed debt shelf; last priced a
new deal in 2012, has $300m maturing Oct. 1
* Israel Electric (ISRELE) Baa2/BBB-; said to hire C, JPM for
at least $500m bond sale in 4Q

MANDATES/MEETINGS

* Sumitomo Life (SUMILF) A3/BBB+; investor mtg July 19
* Woori Bank (WOORIB) A2/A-; mtgs July 11-20

M&A-RELATED

* Analog Devices (ADI) A3/BBB; ~$13.2b Linear Technology acq
* To raise nearly $7.3b debt for deal (July 26)
* Bayer (BAYNGR) A3/A-; said to review Monsanto (MON) A3/BBB+
accounts as bid weighed (Aug. 4)
* $63b financing said secured w/ $20b-$30b bonds seen
* Danone (BNFP) Baa1/BBB+; ~$12.1b WhiteWave (WWAV) Ba2/BB
* Co. Says deal 100% debt-financed, expects to keep IG
profile (July 7)
* Thermo Fisher (TMO) Baa3/BBB; ~$4.07b FEI acq
* $6.5b loans, including $2b bridge (July 4)
* Zimmer Biomet (ZBH) Baa3/BBB; ~$1b LDR acq
* Plans $750m issuance post-completion (June 7)
* Air Liquide (AIFP) A3/A-; ~$13.2b Airgas acq
* Plans to refi $12b loan backing acq via USD/EUR debt
(June 3)
* Great Plains Energy (GXP) Baa2/BBB+; ~$12.1b Westar acq
* $8b committed debt secured for deal (May 31)
* Abbott (ABT) A2/A+; ~$5.7b St. Jude buy, ~$3.1b Alere buy
* $17.2b bridge loan commitment (April 28)
* Sherwin-Williams (SHW) A2/A; ~$9.3b Valspar buy
* $8.3b debt financing expected (March 20)
* Shire (SHPLN) Baa3/BBB-; ~$35.5b Baxalta buy
* Closed $18b Baxalta acq loan (Feb 11)

SHELF FILINGS

* IBM (IBM) Aa3/AA-; automatic mixed shelf (July 26)
* Nike (NKE) A1/AA-; automatic debt shelf (July 21)
* Potash Corp (POT) A3/BBB+; debt shelf; last issued March
2015 (June 29)
* Tesla Motors (TSLA); automatic debt, common stk shelf (May
18)
* Debt may convert to common stk
* Reynolds American (RAI) Baa3/BBB filed automatic debt shelf;
sold $9b last June (May 13)
* Statoil (STLNO) Aa3/A+; 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

* Visa (V) A1/A+; CFO says will issue $2b debt for buybacks by
yr end (July 21)
* Saudi Arabia (SAUDI); said to have hired 6 banks to lead
first intl bond sale (July 14)
* Investment Corp of Dubai (INVCOR); weighs bond sale (July 4)
* Alcoa (AA) Ba1/BBB-; upstream entity to borrow $1b (June 29)
* GE (GE) A3/AA-; may issue despite no deals this yr (June 1)
* Discovery Communications (DISCA) Baa3/BBB-; may revisit bond
market this yr, BI says (May 18)
* American Express (AXP) A3/BBB+; plans ~$3b-$7b term debt
issuance (April)

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