[MORNING CALL:] Making Issuance Great Again

According to the results of our weekly issuance poll now that the dust has settled after Trump’s convincing victory, the Street is looking for, on average, $30bln in new supply to hit the market this week, despite the fact that it will be a four-day work week. And so far, it looks like they might be right.

Thirteen issuers stormed the market this morning from just about every sector imaginable, including two of the “big six” banks – Goldman Sachs and Citibank/Citigroup - something we sort of expected. While not considered “big six” banks, four Yankee banks – HSBC, Societe Generale, BNP Paribas and Westpac Banking - also joined the fray.

There were any number of reasons for the Street to be optimistic about issuance this week, among them earnings blackouts coming to a close; corporate spreads (+77bp) that are the tightest they have been in more than 20 years; the fear that a new Trump regime may lead to higher inflation and higher interest rates (the benchmark 10yr note is trading 8bp higher this morning); a bulging M&A pipeline; and the possibility of a sizeable deal from Apple.

As previously mentioned, the average estimate for ex-SSA issuance came in at $30bln, though at least one is not all that convinced, with the guesses ranging from a low of $15bln, to a high of $40bln.

As for market conditions this morning, the three major indices are opening higher once again building on their all-time closing highs as the so-called “Trump Rally” continues, though the Treasury market appears to be paying the price. As previously mentioned, the benchmark 10yr note is now yielding 4.38%, up 8bp from Friday’s close, while the long bond is trading 6bp higher at 4.53%, and the 2yr note is trading 7bp higher at 4.33%.

However corporate spreads continue to tighten to where the average high-grade bond is now trading 77bp over comparable Treasuries, the tightest spread in more than 20 years.

.

2024 HIGH GRADE ISSUANCE - 11/11 WEEK, NOVEMBER & 2024 ESTIMATES

.

.

2024 HIGH GRADE ISSUANCE - RECENT MANDATES

.

.

2024 HIGH GRADE ISSUANCE - 11/12 CALENDAR

.

---- Subscribe to read more ----

To receive this analysis plus much more, subscribe to IGM. Request your free trial of the service today.