[MORNING CALL:] Chalk Up Another One For the Banks

Earnings blackouts - 255 companies will report this week kept many would be issuers on the sidelines yesterday, which was, to say the least, a bit disappointing after Monday s $18.7bln. While we did see two more members of the big six tap the market, the result paled in comparison to Monday s haul.

Goldman Sachs, who historically has waited until August to tap the US public debt market after reporting Q2 earnings, changed things up a bit, raising $5.5bln through a 2-pt offering of 6nc5 and 11nc10 fixed-to-floating rate notes. It was the sixth trip to the market this year for the bank who has raised $19.75bln so far this year.

Wells Fargo, who raised E2.75bln in the Eurobond market on Monday, followed that up yesterday with a $2bln pernc5 preferred stock offering, in its third trip ($14.25bln) to the US public debt market this year. Lastly, Oaktree Strategic Credit Fund, raised $400m through a 5yr no-grow offering.

Whie there might not have been much for investors to choose from, they still rallied around those few that did come to market. On average, yesterday s deals contracted 32.1bp from IPT/PX, while being 3.31x covered, and pricing with an average NIC of 1.67bp. That compares favorably to the year-to-date metrics of an average compression from IPT/PX of 26.9bp; an average oversubscription rate of 3.7x; and a an average NIC of 2.4bp.

However, there were three ex-SSA offerings announced overnight, along with two SSA offerings. Mitsubishi HC Finance America is in the market with a 5.25yr note offering, while Woori Bank will be looking to sell perpnc5 AT1 notes. GreenSaif Pipeline is also in the market this morning with a 2-pt offering of 12yr and 18yr senior secured amortizing notes.

There is speculation that we could also see a deal from BlackRock who wrapped up investor calls yesterday. And of course, there's the remaining three "big six" banks - Bank of America, Morgan Stanley and Citigroup - who are always the wild cards in the deck.

And there it is. Morgan Stanley is now officially on the docket with a 4-pt offering of a mixture of 4nc3 fixed-to-floating and floating rate senior bank notes and 6nc5 and 11nc10 senior unsecured fixed-to-floating rate notes. This will be the banks fifth foray into the US public debt market this year, already having raised $17.5bln.

As for market conditions this morning, after the Dow closed 743 points higher yesterday on the backs of better-than-expected earnings from the likes of Bank of America, Morgan Stanley and UnitedHealth, plus the continuation of the rotation out of mega-cap technology names into more cyclical names, which is taking its toll on the S&P500 and the Nasdaq, futures are indicating a sell off at the open.

Right now, it appears the Dow is headed for a better than 100 point dip at the bell, while the S&P500 (-1.02%) and the Nasdaq (-1.6%) after reports that the Biden administration is considering tougher trade restrictions if companies continue granting China access to US-made technology.

With traders in the Fed Funds futures market encouraged by the most recent CPI data and subsequent data from the labor market, are putting the odds of a 25bp cut in September at 93.3%, up from just 70.2% a week ago, Treasuries were virtually unchanged overnight, after regaining its footing yesterday. The benchmark 10yr note is trading at 4.17%, its closing level of last night. The same can be said for the long bond (4.38%, though the 2yr lost some ground, now trading 5bp higher at 4.48%. corporate spreads were unchanged at +92bp over comparable Treasuries.

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2024 HIGH GRADE ISSUANCE - 2024 VS 2023 COMPARISON

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2024 HIGH GRADE ISSUANCE - 07/15 WEEK, JULY & 2024 ESTIMATES

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2024 HIGH GRADE ISSUANCE - RECENT MANDATES

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2024 HIGH GRADE ISSUANCE - 07/17 CALENDAR

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2024 HIGH GRADE ISSUANCE - 07/16 PRICINGS

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