[MORNING CALL] Over the River...

… and through the wood to grandfather's house we go." Seventy-nine people are expected to travel this weekend to celebrate the Thanksgiving holiday with family and friends, many from Wall Street which will leave us looking at the twenty-third ex-SSA “zero” issuance day of the year – there were 32 such days last year. It also means that, at most, there are three weeks left for companies to get any proposed financing done for the year is out since the primary market usually shuts down on either side of the fifteenth of the month, or right around the last FOMC meeting (December 17-18), whichever comes first.

But before we start to close the books on 2024, we have quite a bit to be thankful for in the high-grade primary market this year. High-grade ex-SSA issuance outpaced last year by 26.2% ($1.482.208bln), making it the second most prolific ex-SSA high-grade issuance ($1.482.208bln) year on record, topping 2021’s $1.461.891bln and trailing only 2020’s $1.795.825bln. Weekly issuance in 2024 topped the Street’s average estimate thirty-six times this year, while the Street underestimated the resolve of corporate borrowers to tap the market every month this year.

We saw the number of M&A-related transactions balloon from 32 issues last year ($126.15bln / 10.43%) to 46 this year ($170.39bln / 11.57%). We also saw an increase in the amount of issuance from the “big six” banks in 2024. Combined, the “big six” have raised $151.2bln, or 10.2% of the total ex-SSA priced thus far in 2024. Last year the group raised a combined total of $118.675bln, or 9.85% of the ex-SSA total for the year, though that was down from the $170.8bln (14.12%) of the final tally in 2022.

In any event, as we in the corporate primary market watch the paint dry, the general markets continue to hail President-elect Donald Trump’s pick for Secretary of the Treasury, hedge fund manager Scott Bessent, who could help lower budget deficits, something that has been of some concern to market participants. The belief is that Bessent will prioritize stability in the economy, as well as the markets. Futures are indicating a mixed open for the three major averages this morning as the Street awaits the Fed’s preferred inflation reading – the PCE index, which is expected to come in at 2.8% - after the Dow and the S&P500 closed at record highs last night, while the Nasdaq also closed higher, though just shy of its own record high.

Meanwhile, after a slight down tick on the longer end, Treasuries rallied overnight to where the benchmark 10yr note is trading 4bp higher at 4.26%, while the long bond, which closed at 4.48% last night, is also trading 4bp better at 4.44%. As for the 2yr note, which closed unchanged at 4.21% yesterday, is trading at the same level this morning, while corporate spreads widened at tad (1bp) to where the average high-grade bond is now trading 81bp over comparable Treasuries. Spreads are tighter by 23bp on the year.

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2024 HIGH GRADE ISSUANCE - 11/25 WEEK, NOVEMBER & 2024 ESTIMATES

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