Rates Market

• The start of the week saw US Treasury prices down as yields climbed, and stocks remained volatile on election and vaccine news.

• The yield on the 10-year is currently around 0.885%, the middle of the weekly range, which saw a high of 0.975% on Monday.

• Curve spreads are closing little changed on the week, with 2s10s at 71bps and 5s30s at 124bps.

• The 30-year yield was near 1.642% into Friday’s close versus 1.652% Thursday.

Source: Bloomberg.

Corporate Market

• The corporate spread for the iShares iBoxx Investment Grade Corporate Bond ETF, LQD, was approximately +2 bps wider this week.

• Spreads were tighter at the beginning of the week but faded and widened out as COVID cases spiked and new restrictions were imposed.

• Investment grade issuance was light last week, however there was a flurry of new deals in the last three trading sessions of this week. 
• The market saw 17 companies issue new debt and surpassing the projected amount of $30 billion.
• The biggest deal was brought on Tuesday, VZ issued $12 billion 5-part deal.

• Year-to-date run rate is 59% ($1.66 trillion)

• Week-to-date $41.3 billion vs $30 billion expected

Source: Bloomberg.

Corporate New Issue Highlights

JPMorgan $5.75 billion 3-Part Deal

• $2.75b 6NC5 Fxd-to-FRN (Nov. 19, 2026) at +65
• $1.4b 11NC10 Fxd-to-FRN (Nov. 19, 2031) at +90
• $1.6b 21NC20 Fxd-to-FRN (Nov. 19, 2041) at +87.5

Verizon $12 billion 5-Part Deal

• $2b 5Y Fixed (Nov. 20, 2025) at +40
• $2.25b Long 10Y Fixed (Jan. 20, 2031) at +85
• $3b 20Y Fixed (Nov. 20, 2040) at +115
• $2.75b 30Y Fixed (Nov. 20, 2050) at +115
• $2b 40Y Fixed (Nov. 20, 2060) at +130

Bristol-Myers Squibb $7 billion 6-Part Deal

• $1.5b 3NC1 Fixed (Nov. 13, 2023) at +30
• $1b 5Y Fixed (Nov. 13, 2025) at +35
• $1b 7Y Fixed (Nov. 13, 2027) at +45
• $1.25b 10Y Fixed (Nov. 13, 2030) at +55
• $750m 20Y Fixed (Nov. 13, 2040) at +65
• $1.5b 30Y Fixed (Nov. 13, 2050) at +85

Muni Market

• Municipals were slightly lower on the week (+1-2bps) outperforming Treasuries (+4-7bps).

• With the White House stepping back from further stimulus discussions, wider divisions between McConnell and Pelosi likely lower the odds additional stimulus will be passed before next year.

• The 2 Georgia Senate runoff races on Jan. 5 will play an important role for the future of fiscal policy. Currently, Republicans hold a 50-48 lead in the Senate. History favors Republicans in turnout for runoff races. In the event Democrats win both races, the Vice President serves as tie-breaker.

• Municipal bond funds reversed prior week outflows adding $1.2 billion for the week ending 11/11.

• With muted supply expected into year end, current supply/demand dynamics are supportive. 30-day visible supply of $15.9 billion vs $22.4 billion in redemptions. 

• Issuance next week is expected to be $9.83 billion. Notable deals include; State of New Jersey $4bn, Commonwealth of Massachusetts $1.36bn, Port of Oakland $531.1mm, City of Baltimore MD Water Utility Fund $415.9mm.

Source: Bloomberg.