[MORNING CALL] Business as Usual?

While we may not have seen any ex-SSA offerings announced overnight, after a bit of a hiatus, SSAs are back. The only deal (so far) on today’s docket is a proposed 3yr note offering from OPEC Fund for International Development, which has already built a book of $4.4bln+, while Koreas Development Bank has lined up a 3-pt offering of 3s and 5s for tomorrow.

Aside from the “big six” banks, which got an unexpected boost from yesterday’s $8.5bln 5-pt offering from Goldman Sachs, in its second trip to the market this year, SSAs have been the dominant factor in this month’s high-grade issuance. While the “big six” have accounted for 30.2% ($45.4bln) of ex-SSA issuance ($150.55bln), they have contributed only 18.8% to overall (SSA-inclusive) issuance ($241.065bln) – which has already topped all monthly estimates - while SSAs have raised $90.515bln, or 37.5% of that total.

Be that as it may, yesterday’s aforementioned Goldman Sachs deal, which built a book of $30.62bln and priced with a negative average NIC of 3.6bp, was joined by a rather hefty $4.25bln 4-pt offering from Royal Bank of Canada which paid less than 1.5bp to get the deal done. But the most impressive performance came from Bank of New Zealand’s $500m 10nc5 subordinated note offering, which was 6.6x oversubscribed.

Yesterday’s $13.25bln in ex-SSA issuance – the Street was looking for, on average, $24bln to price this week - brought the total for the month to $150.55bln. Coming into this month, the Street was under the impression that we could see, on average, $187.5bln in new ex-SSA supply. The least optimistic outlook was calling for $175bln, while the most optimistic of the respondents thought we could see as much as $200bln cross the tape this month.

As we mentioned last night, we’re expecting the regional banks pick up the mantel this week as they have done in the past. To that end, PNC Financial Services Group just announced a 2-pt offering of 6nc5 and 11nc10 F-T-Fs, and we would expect to see at least five more borrowers to join them.

As for general market conditions this morning, futures are looking at a strong open this morning getting a boost from the latest round of earnings. The Dow (+123) is getting a boost from better-than expected earnings results from Procter & Gamble (+5.57%) and Johnson & Johnson (+1.57%), while the S&P500 (+0.48%) and the Nasdaq (+0.93%) is being powered by Netflix (+14.79%), who blew the Street away with their quarterly results.

This after the stock market embraced President Trump’s second term as President, with the Dow rallying more than 530 points and the S&P500 advancing 0.88%, while the Nasdaq saw a more moderate (0.64%) gain as the newly inaugurated President backtracked a bit on his proposed worldwide tariffs.

The Treasury market also reacted positively to the new President’s initiatives with the benchmark 10yr note yield falling 5bp to 4.56%, its lowest level in a little over three weeks, while the long bond yield fell 4bp to close at 4.80%. However, the 2yr note was unchanged at 4.27%. Yields were virtually unchanged overnight as were corporate spreads which left the average high grade bond trading 82bp over comparable Treasuries.

While Trump said he was considering imposing 25% tariffs on both Canada and Mexico due to their border policies, he issued a broad memorandum directing Federal agencies to study what he deems as unfair trade policies with foreign countries but stopped short of authorizing new levies at this time.

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2024 HIGH GRADE ISSUANCE - 01/20 WEEK, JANUARY & 2025 ESTIMATES

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2025 HIGH GRADE ISSUANCE - RECENT MANDATES

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2025 HIGH GRADE ISSUANCE - 01/22 CALENDAR

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2025 HIGH GRADE ISSUANCE - 01/21 PRICINGS

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