[MORNING CALL] It's Getting Very Near the End
It appears the high-grade issuance is winding down for the year. Activity in the primary market was limited to just two offerings yesterday. Johnson Controls tapped its outstanding 4.90s of ’32 with another $250m, while Altlas Warehouse raised $1bln via a 2-pt offering of 3yr and 5yr notes.
That brought ex-SSA issuance for the week to $23.8bln, and with nothing expected to price today, just shy of the lowest weekly estimate of $25bln, as well as the lowest monthly estimate of the same. Investors didn’t appear all that enthused with yesterday’s offerings which contracted only 17.7bp from IPT/PX, while building a combined book of $3.5bln (2.8x covered) and pricing with an average NIC of 5bp.
As for the general market, futures are indicating a lower open for the three major averages in the runup to today’s jobs report (220k). This after all three major averages retreated from the all-time record closes, with the Dow lower by 248 points, while the S&P500 and the Nasdaq both lost ground, closing lower by 0.19% and 0.18%, respectively.
Treasuries were virtually unchanged overnight, after a mixed session yesterday. Yesterday, the benchmark 10yr note yield fell 2bp to close at 4.17%, while the long bond also traded 2bp better at 4.33%. However, the yield on the 2yr note headed in the opposite direction, tacking on 2bp to close at 4.15%. This morning the 10yr is trading at 4.18%; the long bond at 4.33%; and the 2yr at 4.16%. Corporate spreads widened a tad overnight with the average high-grade bond now trading at 81bp over comparable Treasuries.
Despite nothing in the pipeline, we don’t expect that we have seen the last of high-grade corporate issuance for the year just yet. We fully expect the flow of issuance, though trickle might be a better word, issuance to continue right up until at least next Wednesday with the release of the November CPI (0.2% m-o-m / 2.7% y-o-y) data.
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2024 HIGH GRADE ISSUANCE - 12/02 WEEK, DECEMBER & 2024 ESTIMATES
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| 12/02 WK | LO EST | AVE EST | HI EST | ACTUAL | DEC | LO EST | AVE EST | HI EST | ACTUAL | 2024 | LO EST | AVE EST | HI EST | ACTUAL |
| EX-SSA | $25.0B | $27.0B | $30.0B | $23,800 | EX-SSA | $25.0B | $40.0B | $50.0B | $23,800 | EX-SSA | $1,506,008 | |||
| OVERALL | $30.0B | $32.5B | $35.0B | $23,800 | OVERALL | $30.0B | $42.5B | $55.0B | $23,800 | OVERALL | $1,877,523 |
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2024 HIGH GRADE ISSUANCE - 12/05 PRICINGS
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| ISSUE | RATINGS | MGRS | AMT | CALL | CPN | MAT | SPRD | TYPE | |
| 12/05 | JOHNSON CONTROLS | BAA2/BBB+ | BOA/UBS | 250 | T+30 | 4.900 | 8YR | +77 | I |
| 12/05 | ATLAS WAREHOUSE LENDING | BAA3/BBB- | BARC/BNP/JPM/MS | 500 | T+30 | 6.050 | 3YR | +195 | F |
| 12/05 | ATLAS WAREHOUSE LENDING | BAA3/BBB- | BARC/BNP/JPM/MS | 500 | T+30 | 6.250 | 5YR | +220 | F |
| 2/3 | 1250 | 2/3 | 1250 | . |
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