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Weekly Fixed Income Views from February 5, 2021 Thumbnail

Weekly Fixed Income Views from February 5, 2021

Insights

Rates Market

  • Treasuries were down on the week out the belly of the curve, as the yield on the 10-year continued to climb in the new year.
  • The curve steepened further Friday as the yield on the two-year touched lows of 0.10%, last seen in March 2020, while the long end rose by almost ~5bps to 1.94%.
  • 10s were trading around 1.16% on Friday, while the spread between 5s and 30s climbed to highs of 148bps.
  • January’s job number came in weaker than expected, helping to bolster stimulus talks out of D.C. and President Biden’s $1.9 trillion relief package.
  • Headlines remain focused on stimulus, vaccination updates and earnings strength moving into next week.

Source: Bloomberg.

Corporate Market

  • The corporate spread week-to-date for the USD Investment Grade All Sector OAS was tighter by 7 bps.
  • Investment-grade funds recorded $6.15 billion in inflows.
  • High yield funds reported $1.3 billion in inflows.
  • Busy week for new issuance as the market saw new debt exceed the street’s expectation by 50%.
    • Year-to-date: $172.8 billion (+18% YoY)
    • Month-to-date: $45.3 billion
    • Week to date: $45 billion vs projected $30 billion

Source: Bloomberg.

Corporate New Issue Highlights

Alibaba priced a $5 billion 4-part deal

  • $1.5b 10Y Fixed at +100
  • $1b 20Y Fixed at +100
  • $1.5b 30Y Fixed at +120
  • $1b 40Y Fixed at +130

Apple priced a $14 billion 6-part deal

  • $2.5b 5Y Fixed (Feb. 8, 2026) at +32
  • $2.5b 7Y Fixed (Feb. 8, 2028) at +47
  • $2.75b 10Y Fixed (Feb. 8, 2031) at +57
  • $1.5b 20Y Fixed (Feb. 8, 2041) at +72
  • $3b 30Y Fixed (Feb. 8, 2051) at +82
  • $1.75b 40Y Fixed (Feb. 8, 2061) at +95

Boeing priced a $9.825bln 3-part deal

  • $1.325b 2NC1 Fixed at +105
  • $3b 3NC1 Fixed at +125
  • $5.5b 5NC2 Fixed at +175

Muni Market

  • Benchmark municipals were slightly weaker (+1-2 bps) outperforming treasuries (+4-12bps) as a result of a steepening yield curve. Ratios moved lower.
  • Municipal fund inflows continued adding $1.58 billion for the week ended 2/3, the 13th consecutive week.
  • The Senate passed a 51-50 budget resolution with Harris as the tiebreaker. This will allow the new stimulus relief proceedings to move forward utilizing the reconciliation process which only requires a simple majority rather than the normal 60 vote requirement.
  • Supply remains light with approx. 30% taxable. Next week, US state and local governments are expected to issue $6.85 billion. Notable deals include; State of Washington $862.6 million, Metropolitan Transportation Authority $700 million, City of Chula Vista, CA $349.1million.

Source: Bloomberg.