facebook twitter instagram linkedin google youtube vimeo tumblr yelp rss email podcast phone blog search brokercheck brokercheck Play Pause
Weekly Fixed Income Views from October 9, 2020 Thumbnail

Weekly Fixed Income Views from October 9, 2020

Rates Market

  • Treasuries were under pressure during the week as stocks and stimulus talks gained traction.
  • Yields moved higher across the curve led by the long end. Monday saw the 30year bond yield hit a high of 1.591%.
  • The spread between the 5-year and 30-year steepened back above125bps compared to the year-to-date high of 128.5bps back in June.
  • Heading into the weekend, 10-year Treasuries were trading around the new range at 0.775%.

Source: Bloomberg.

Corporate Market

  • The corporate spread for the iShares iBoxx Investment Grade Corporate Bond ETF, LQD, was approximately-8 bps tighter this week.
  • As we observe the Columbus Day holiday weekend, issuers came to the market earlier in the week with more than half of the projected volume done on Monday. 
  • The average initial price talk tightened 30bps. 
  • There is healthy demand as issuers take advantage of low rates.  
  • Year-to-date run rate 67% ($1.57 trillion).
  • Week-to-date $25 billion vs $15 billion expected.

Source: Bloomberg.

Corporate New Issue Highlights

  • Steel Dynamics $750 million 2-part deal
  • Deal was 15x oversubscribed and tightened -50bps from initial price talk
  • $350m 7Y Fixed (Oct. 15, 2027) at +120
  • $400m 30Y Fixed (Oct. 15, 2050) at +185
  • Lowe's $4 billion 3-part deal
  • $1b Long 7Y Fixed (April 15, 2028) at +75
  • $1.25b 10Y Fixed (Oct. 15, 2030) at +95
  • $1.75b 30Y Fixed (Oct. 15, 2050) at +140
  • Conagra $1 billion 7-year
  • Upsized the deal to $1bln from $750mln(will not grow)
  • $1b 7Y Fixed (Nov. 1, 2027) at +100

Muni Market                          

  • Municipals traded off with Treasuries on the week, the curve steepened 1-10 bps.
  • Flows into Municipal bond funds reversed course after last week’s outflow of $775mm, adding $1.7bn for the week ended 10/7.
  • Continued heavy issuance combined with uncertainties surrounding further stimulus will likely provide upward pressure on yields for the remainder of the month heading into the election.
  •  After an abrupt tweet on Tuesday to postpone further stimulus talks and focus on smaller targeted measures, the White House came back to the table on Thursday open to a larger comprehensive stimulus bill. Both sides still remain divided on the size and content of the bill.
  •  On the heels of a downgrade last week, NYC issued $1.125bn this week in GO bonds in a deal that was 4-5x oversubscribed but at wider spreads than the previous issuance in early March. 
  • Next week’s issuance is expected to be $10.8bn. Notable deals include; City & County of Denver CO Airport System $924.9mm, City of Kansas City Missouri $607.6mm, Atlanta GA Water & Wastewater $503.7mm.
  •  30-day visible supply sits at $19.1bn vs $19.4bn in redemptions.

Source: Bloomberg