[MORNING CALL] Time Marches On

Despite being the second most prolific ex-SSA issuance February on record behind last February’s $199.425bln, for the first time in 14 months ex-SSA issuance did not live up to Street expectations. The final tally for February came in at $166.831bln, falling short of the average monthly estimate of $170bln.

However, overall (SSA-inclusive) issuance ($195.781bln) did manage to top the average monthly estimate of $190bln. Year-to-date, ex-SSA issuance stands at $360.331bln, a decline of 8.8% from this time last year ($395.045bln, while overall issuance ($486.546bln) is running at a 5.8% slower clip than last year ($516.745bln). But time marches on.

Over the past decade, the month of March has ranked as the busiest issuance month of the year, averaging $156.425bln in ex-SSA issuance, though we have seen more than $200bln price three times (’20, ’21 and ’22) during the month, but as little as $101bln (2023). And this year should be no different. As a matter of fact, even better, as the prospects of more M&A-related deals looming large has the Street very optimistic, beginning with this week.

The first week of March is historically a busy one. Over the past five years, the first week of March has yielded, on average, $54.75bln in new ex-SSA supply, leading the respondents to our weekly issuance poll aiming for the moon. According to the results of our weekly/monthly polls, the Street is looking for, on average, $60bln to come to market this week, with the guesses ranging from a low of $50bln, to a high of $71bln.

As for the month, the average estimate came in at a surprising $177bln, while the most bearish of the group is looking for at least $150bln to cross the tape, though the bullish call is for as much as $200bln. Last March was a bit of an outlier with 101 borrowers raising just $1.43bln, but that was after a record February which saw $199.425bln print. With this February coming in at $166.8bln, there should be no letup this time around.

And we’re off to a good start with the announcement of a 4-pt offering of 3yr, 5yr fixed and/or floaters and 10yr notes from Sumitomo Mitsui Trust Bank Ltd. And they are not expected to be alone with as many another dozen issuers eyeing the market conditions this morning, including Synopsis' proposed 6-pt M&A-related transaction.

As for market conditions this morning, futures are indicating a strong opening for the three major indices as investors weigh the ramifications of the proposed tariffs that are scheduled to go into effect this week. The uncertainty surrounding said tariffs caused all sorts of volatility in the stock market, with all three turning in a losing month, despite a keen rally on Friday – the Dow closed 600 points higher, while the S&P500 closed 1.59% higher and the Nasdaq closed 1.63% in the green.. The Dow fell -1.6%, while the S&P500 dropped 1.4%. The Nasdaq suffered the most, falling 4%, its worst month in nearly a year

Treasuries were slightly higher over the weekend, with the benchmark 10yr note trading at 4.25% this morning, 1bp higher than Friday’s close. Over the month of February, the 10yr saw its yield fall 34bp. Meanwhile, the long bond, which closed out February yielding 4.51%, 32bp lower than the previous month, is trading 2bp higher this morning at 4.53%.

The 2yr note also backed up to 4.02%, 4bp higher than Friday’s close. At the same time the 3mos T-Bill/10yr curve remained inverted by 4bp. Corporate spreads also backed up over the weekend with the average high grade bond now trading 88bp over comparable Treasuries, its widest level in four months, though it has more to due with a recalibration of the index, than a weakening in investor demand.

The markets will also be preparing themselves for the latest read on the economy with the release of several key data points beginning with manufacturing PMI (51.6) and ISM manufacturing (50.8) today. Wednesday brings the S&P services PMI (49.7), ISM service index (52.7), Durable goods (3.1%) and the ADP private payrolls report (146k). Aside from the normal initial jobless claims (235k) on Thursday, the market will be gearing up for the February jobs report (160k) on Friday.

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2025 HIGH GRADE ISSUANCE - 03/03 WEEK, MARCH & 2025 ESTIMATES

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2025 HIGH GRADE ISSUANCE - RECENT MANDATES

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2025 HIGH GRADE ISSUANCE - 03/03 CALENDAR

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