- The long end of the curve led yields lower into Friday as the spread between the 5-year note and 30-year bond flattened 5 bps on the week.
- The bond market continues to be under pressure with weak auctions and Treasury supply flooding the market. This inflow of cash has held rates at the front end of the curve and overnight repurchase agreements hovering around zero.
- Heading into the final days of the quarter, the 10-year dropped from highs of 1.72% last Friday to 1.65% today.
- On the data front, personal income declined 7.1%, after last month’s gain thanks to stimulus activity. Consumer spending also declined. Earlier in the week, new home sales declined sharply, the lowest read since May of last year.
- The corporate spread week-to-date for the USD Investment Grade All Sector OAS was tighter by +4bps.
- Investment grade funds recorded $3.26 billion in inflows vs $5.4 billion in inflows the prior week.
- High Yield funds reported $1.3 billion in outflows vs $410 million in inflows the prior week.
- Primary issuance new issue week-to-date was higher than the street’s projected amount.
- ORCL issued the 2nd largest bond deal this year, totaling $15 billion in 6 parts on Monday which triggered a credit downgrade. The company plans to use the bond proceeds to call bonds, pay dividends and stock repurchases.
- Year-to-date $432 billion (+13% YoY)
- Month-to-date $191.7 billion
- Week-to-date $42 billion vs projected $40 billion
Corporate New Issue Highlights
Southern California Edison priced $1.85 billion
- $350m 2Y Fixed (April 3, 2023) at +60
- $400m 2Y FRN (April 3, 2023) at SOFR+64
- $700m 3NC2 Fixed (April 1, 2024) at +80
- $400m 3NC2 FRN (April 1, 2024) at SOFR+83
Schwab $600 million PerpNC5
- $600m PerpNC5 Fixed to Yield 4.45%
Oracle priced $15 billion in 6-parts
- $2.75b 5Y Fixed (March 25, 2026) at +80
- $2b 7Y Fixed (March 25, 2028) at +100
- $3.25b 10Y Fixed (March 25, 2031) at +120
- $2.25b 20Y Fixed (March 25, 2041) at +140
- $3.25b 30Y Fixed (March 25, 2051) at +155
- $1.5b 40Y Fixed (March 25, 2061) at +170
- Benchmark yields were 5-7 bps lower on the week.
- Municipal funds saw inflows of $592 mm for the week ending 3/24.
- Primary market activity continues to be well received with a number of deals re-pricing yields lower.
- Ratings agencies have lifted their negative outlook on almost all municipal sectors as a result of the $1.9 trillion stimulus package.
- State and local governments are expected to price $3.02 billion next week. Notable deals include; City & County of Denver CO $273.8 million, Foothill-De Anza Community College $270.4 million, Pennsylvania Turnpike $250 million, Northern Kentucky University $205.2 million.