Rates Market

• The front end of the curve remained flat, while further out the curve steepened by nearly 5bps.
• The spread between the 5-year and 30-year moved higher to 111.9bp, which is the steepest level since early July.
• 10-year Treasury yields remained range bound throughout the week around 0.70%.
• On the supply front, this week’s 30-year auction (which was a record size) saw a tail of more than 2bps, with long end yields trading around 1.41%.

Source: Bloomberg.

Corporate Market

• The iShares iBoxx Investment Grade Corporate Bond ETF, LQD, was approximately +4bp this week, as the market fears fiscal stimulus support may end.
• Primary new issuance this week was approximately $42 billion vs expectation of $30-$35 billion.
• Issuance year to date is $1.31 trillion, closing in on 2017’s record volume of $1.33 trillion. This represents a run rate of 78% ahead of last year.

Source: Bloomberg.

Corporate New Issue Highlights

CVS Health Corp - $4 billion, 3-part deal

• $1.5 billion 7-year Fixed (Aug. 21, 2027) at +85, guidance +90a (+/-5), initial price talk +120 area, issue price 99.72 to yield 1.342% 
• $1.25 billion 10-year Fixed (Aug. 21, 2030) at +110, guidance +115a (+/-5), initial price talk +135 area, issue price 99.836 to yield 1.768% 
• $1.25 billion 20-year Fixed (Aug. 21, 2040) at +135, guidance +140a (+/-5), initial price talk +160 area, issue price 99.954 to yield 2.703% 

Apple Inc. - $5.5 billion, 4-part deal

• $1.25 billion 5-year Fixed (Aug. 20, 2025) at +28, guidance +28#, initial price talk +45 area 
• $1.25 billion 10-yeaR Fixed (Aug. 20, 2030) at +58, guidance +58#, initial price talk +75 area 
• $1.25 billion 30-year Fixed (Aug. 20, 2050) at +100, guidance +100#, initial price talk +115 area 
• $1.75 billion 40-year Fixed (Aug. 20, 2060) at +118, guidance +118#, initial price talk +135 area 

Chevron Corporation - $4 billion 7-part deal

• $400 million 2-year Fixed (Aug. 12, 2022) at +20, guidance +25a (+/-5), initial price talk +35 area, re-offer price par to yield 0.333% 
• $350 million 2-year FRN (Aug. 12, 2022) at 3mL+11, guidance L equiv, initial price talk L equiv
• $500 million 3-year Fixed (Aug. 11, 2023) at +28, guidance +30a (+/-2), initial price talk +45 area 
• $500 million 3-year FRN (Aug. 11, 2023) at 3mL+20, guidance L equiv, initial price talk L equiv 
• $750 million 5-year Fixed (Aug. 12, 2025) at +45, guidance +50a (+/-5), initial price talk +65 area 
• $750 million 7-year Fixed (Aug. 12, 2027) at +60, guidance +65a (+/-5), initial price talk +85 area 
• $750 million 30-year Fixed (Aug. 12, 2050) at +110, guidance +115a (+/-5), initial price talk +130 area 

Visa Inc - $3.25 billion 3-part deal

• $500 million 7-year Fixed (Aug. 15, 2027) at +35, guidance +40a (+/-3), initial price talk +60 area 
• UOP: To refinance or finance, in whole or in part, new or ongoing projects, with disbursements covering project expenditures during the three years preceding the date of issuance and up to and including the maturity date of the 2027 notes, that meet one or more of following eligibility criteria (such projects, “Eligible Green Projects”) 
• $1 billion long 10-year Fixed (Feb. 15, 2031) at +57, guidance +60a (+/-3), initial price talk +75-80 
• $1.75 billion 30-year Fixed (Aug. 15, 2050) at +82, guidance +85a (+/-3), initial price talk +100-105, 6-month par call (make whole call)

Muni Market                          

• Record low yields have enticed state and local governments to refinance outstanding debt, issuing $41 billion in refinancings over the past 2 months.
• Washington continues to be locked in a stalemate as talks halted with both sides blaming the other for lack of concessions on state aid.
• Earlier this week the Fed cut the rate on the $500 billion Municipal Liquidity Facility by 50bps to encourage participation. Since the program’s inception in April, Illinois is the only state that has utilized the program. The timing may be beneficial for the MTA which is exploring issuing $450 million via bids or through the MLF.
• Strong technicals remain in place as municipal bond funds added $2.3 billion for the week ended Wednesday, marking the 14^th straight week of inflows. 
• 30 day visible supply $23.2 billion vs $35.4 billion in redemptions

Source: Bloomberg