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Weekly Fixed Income Views from November 20, 2020 Thumbnail

Weekly Fixed Income Views from November 20, 2020

Rates Market

  • US Treasury prices are down heading into Friday’s close, off of the week highs yesterday.
  • Yields are higher across the curve today, with the 10-year at 0.842%.  
  • The spread between the 2-year and the 10-year yield narrowed to 67bps, with the 5-year & 30-year down to 117bps.
  • Headlines remain focused on all COVID related updates, as emergency lending discussions between the Treasury department and the Fed continue.

Source: Bloomberg.

Corporate Market

  • The corporate spread for the iShares iBoxx Investment Grade Corporate Bond ETF, LQD, was approximately -6 bps tighter this week.
  • Investment Grade spreads are the tightest they’ve been since Feb. 2020.
  • New deals and volume is expected to taper off as we head into the holiday week next week. The street is projecting zero to $5 billion of new debt.
  • Year-to-date run rate: 58% ($1.7 trillion).
  • Week-to-date: $39 billion vs $25-30 billion expected.

Source: Bloomberg.

Corporate New Issue Highlights

Allstate $1.2b Debt Offering in 2 Parts

  • $600m 5Y Fixed (Dec. 15, 2025) at +37.5
  • $600m 10Y Fixed (Dec. 15, 2030) at +65

TJX $1b Debt Offering in 2 Parts

  • $500m Long 7Y Fixed (May 15, 2028) at +53
  • $500m Long 10Y Fixed (May 15, 2031) at +73

Aramco $8b Debt Offering in 5 Parts

  • $500m 3Y Fixed (Nov. 24, 2023) at +110
  • $1b 5Y Fixed (Nov. 24, 2025) at +125
  • $2b 10Y Fixed (Nov. 24, 2030) at +145
  • $2.25b 30Y Fixed (Nov. 24, 2050) to Yield 3.3%
  • $2.25b 50Y Fixed (Nov. 24, 2070) to Yield 3.65%

American Tower $1.7b Debt Offering in 3 Parts

  • $500m 3Y Fixed (Jan. 15, 2024) at +43
  • $650m 7Y Fixed (Jan. 31, 2028) at +87.5
  • $550m 30Y Fixed (Jan. 15, 2051) at +137.5

Muni Market

  • Municipals outperformed Treasuries for the week with the AAA yield curve flattening approx. 10bps.
  • Municipal mutual funds added $1.3 billion in inflows for the week ending 11/18.
  • Supply/demand dynamics remain supportive with 30-day visible supply of $6.87 billion vs $24.7 billion of redemptions.
  • Issuance next week is expected to be $2.99 billion. Notable deals include; JFK International Air Terminal $1.01 billion, San Francisco Community College $550 million, Denton Independent School District $269.4 million.

Source: Bloomberg.