[THE ENDGAME] : Is the Bloom Off the Rose?
From the looks of it, it appears the so-called “Trump Rally” is losing some of its luster. Or is it just time for investors to cash in and reap the rewards of the post-election rally. After a bit of a rebound yesterday, the Dow dropped a little more than 200 points, dragging the S&P500 (-0.6%) and the Nasdaq (-0.64%) along with it after Fed Chairman Powell hinted that the strength of the economy could warrant some patience with future rate cuts.
“The strength we are currently seeing in the economy gives us the ability to approach our decisions more carefully,” Powell said. October’s read on the produce price index came in more or less in line with expectations, though still indicated that inflation is still hanging around.
Powell’s comments prompted traders in the Fed Funds futures market to reduce their odds of a 25bp rate cut next month to 62% from 82.5% earlier in the session. However, aside from the short end of the curve – the 2yr note saw its yield jump 7bp on the day, closing at 4.34% - the rest of the Treasury market took Powell’s comments in stride. The benchmark 10yr note, which was already higher by 14bp on the week, closed at 4.43%, 1bp lower, while the long bond yield slipped 7bp to close at 4.58%.
But neither the stock market nor the Treasury market had much effect on high-grade corporate primary activity. While maybe not as active as the previous two sessions (21 deals/45 tranches/$41.65bln), five issuers still managed to raise $4.7bln, bringing ex-SSA issuance for the week to $46.35bln, enough to rank this week as the tenth busiest ex-SSA issuance week of the year.
Today’s selections were made up mostly of the latest darling of the high-grade world – subordinated debt hybrids, as investors have never abandoned that never ending quest for yield. There have been 90 such deals this year ($96bln), nine priced this week this week alone, as compared to 36, all last year ($45.35bln). Not only that. On average, subordinated deals have contract anywhere from 35bp to 50bp, while senior unsecured debt averages 25bp to 28bp. The average sub deal coverage this week came in above 4.6x, while higher-rated bonds average 3.36x.
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| A3/A-/A- | Consolidated Edison Co of New York (ED) |
| $1.45bln [Consolidated Edison Co of New York] (ED) 3-pt (3yr FRN (11/18/27), long 10yr (3/15/35) & long 30yr (3/15/55)) SEC registered senior unsecured notes. A3/A-/A-. BofA/BARC/MIZ/SCOT. UOP: Repayment of short-term debt bearing interest at variable rates, and to subsequently fund with available cash the redemption of $224.6 million aggregate principal amount of outstanding four subseries of variable rate tax-exempt Facilities Revenue Bonds. MWC. Par call 3mos (10yr), 6mos (30yr) prior to mat. Denoms 2k x 1k. S/D 11/18 (U). |
| IPT(s) | GUIDANCE | LAUNCHED | PRICED |
| SOFR+80-85 | SOFR+52# | $350m 11/18/27 SOFR+52 | $350m SOFR+52 11/18/27 100.00 SOFR+52 |
| +95 area | +70# | $450m 3/15/35 +70 | $450m 5.125% 3/15/35 99.888 5.14% +70 MW T+15 (TSY 4.25% 11/15/34) |
| +120 area | +95# | $650m 3/15/55 +95 | $650m 5.50% 3/15/55 99.177 5.557% +95 MW T+15 (TSY 4.25% 8/15/54) |
| BOOKS: | $1.6bln, $1.9bln, $1.1bln |
| NIC(s): | N/A, +01, +01 |
| COMP(s): | ED 3.125 11/15/27 $95.85 ~T+37 G+37 ED 3.800 05/15/28 $97.25 ~T+38 G+40 ED 5.500 03/15/34 $103.04 ~T+66 G+68 ED 5.375 05/15/34 $102.28 ~T+65 G+66 ED 4.625 12/01/54 $87.40 ~T+89 G+90 ED 4.300 12/01/56 $81.00 ~T+99 G+100 |
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| Baa3/BBB-/BBB- | Ares Strategic Income Fund (ARESSI) |
| $750m [Ares Strategic Income Fund] (ARESSI) 144a Reg S (w/rts) long 3yr (3/15/28) senior unsecured notes. Baa3/BBB-/BBB-. BofA/BARC/JPM/SMBC/WFS. UOP: To repay outstanding indebtedness under its credit facilities. MWC. Par call 1mos prior to mat. COC @100. Denoms 2k x 1k. S/D 11/21 (F). |
| IPT(s) | GUIDANCE | LAUNCHED | PRICED |
| +190 area | + | $750m 3/15/28 +165 | $750m 5.655 3/15/28 99.210 5.919% +165 MW T+25 (TSY 4.125% 11/15/27) |
| BOOKS: | $1.7bln |
| NIC(s): | +01 |
| COMP(s): | ARESSI 6.35 08/15/29 $101.04 ~T+180 G+180 ARESSI 5.6 02/15/30 $97.88 ~T+179 G+178 |
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| Baa3/BB-/BBB- | NatWest Group PLC (NWG) |
| $750m [NatWest Group PLC] (NWG) perpnc10 AT1 SEC registered junior subordinates contingent convertible capital notes. Baa3/BB-/BBB- (s/s/s). CITI/JPM/NWM(B&D)/UBS/WFS. UOP: GCP. Perpetual call, tax changes call, regulatory / capital disqualification call. Callable from Nov. 19, 2034 until May 19, 2035 or any Reset Date thereafter. Trigger Event: A Conversion Trigger Event shall occur at any point in time at which the fully loaded CET1 Ratio of the Regulatory Group is less than 7.00%. Coupon: Fixed until May 19, 2035. If not redeemed, coupon resets every 5Y at 5Y UST +margin, converted to a quarterly rate in accordance with market convention. Denoms 200k x 1k. LSE Listing. NY Law. Target Market: Manufacturer target market (UK MiFIR/MiFID II product governance) is eligible counterparties and professional clients only (all distribution channels). No PRIIPs key information document (KID)/ UK PRIIPs KID has been prepared as not available to retail in the EEA or in the UK. S/D 11/19 (YF) |
| IPT(s) | GUIDANCE | LAUNCHED | PRICED |
| 7.75% area | 7.3%# | $750m PerpNC10 7.3% | $750m 7.30% PerpNC10 100.00 7.30% (Back End: 5Y TSY+293.7) (TSY 3.875% 8/15/34) |
| BOOKS: | $3.25bln |
| NIC(s): | N/A |
| COMP(s): | N/A |
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| Ba2/BB/BB+ | Societe Generale SA (SOCGEN) |
$1bln [Societe Generale SA] (SOCGEN) 144a Reg S AT1 perpnc5.5 junior subordinated notes. Ba2/BB/BB+ (s/s/s). BofA/CITI/MS/SG(B&D)/TD. The Issuer may redeem the Notes at the Redemption Amount (in whole, but not in part) on (i) any date in the six- month period preceding (and including) the First Reset Date and (ii) any date in the six-month period preceding (and including) each Reset Date thereafte. Clean-up Call: 75%. Trigger Event: If the Issuer’s consolidated Common Equity Tier 1 capital ratio falls below 5.125%. ax changes call, regulatory / capital disqualification call. Coupon: Fixed until May 21, 2030. If not redeemed, coupon resets every 5Y at 5Y UST+margin. Denoms 200k x 1k. Target Market: Eligible counterparties and professional clients only. S/D 11/21 (YF) (NOT COUNTABLE) |
| IPT(s) | GUIDANCE | LAUNCHED | PRICED |
| 8.75% area | 8.125%# | $1bln PerpNC5.5 8.125% | $1bln 8.125% PerpNC5.5 100.00 8.125% (Back End: +379 (INTRP)) |
| BOOKS: | N/A |
| NIC(s): | N/A |
| COMP(s): | N/A |
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| Baa3/BBB-/BBB- | Dominion Energy Inc (D) |
| $1.25bln [Dominion Energy Inc] (D) 30.5nc10.25 (5/15/55) SEC registered $1,000 par fixed-to-fixed reset rate junior subordinated notes. Baa3/BBB-/BBB-. BofA/GS/WFS. UOP: General corporate purposes and to repay short term debt, including commercial paper. Denoms 2k x 1k. S/D 11/18 (U). |
| IPT(s) | GUIDANCE | LAUNCHED | PRICED |
| 7.00% area | 6.625%# | $1.25bln 5/15/55 6.625% | $1.25bln 6.625% 5/15/55 100.00 6.625% (Back End: +220.7) (TSY 4.25% 11/15/34) |
| BOOKS: | $4bln |
| NIC(s): | N/A |
| COMP(s): | N/A |
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| NR/BBB/BBB | Zions Bancorporation NA (ZION) |
| $500m (WNG) [Zions Bancorporation NA] (ZION) 11nc10 (11/19/35) 3(a)2 exempt subordinated unsecured fixed-to-floating notes. NR/BBB/BBB. JPM/RBC. Par call 1yr prior to mat. Denoms 250k x 1k. S/D 11/19 (F). |
| IPT(s) | GUIDANCE | LAUNCHED | PRICED |
| +275 area | N/A | $500m (WNG) 11/19/35 +240 | $500m (WNG) 6.816% 11/19/35 100.00 6.816% +240 (Back End: SOFR+283) (TSY 4.25% 11/15/34) |
| BOOKS: | $3.25bln |
| NIC(s): | N/A |
| COMP(s): | N/A |
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| Aa1/AA+ | SP Group Treasury Pte Ltd (SPSP) |
$700m [SP Group Treasury Pte Ltd] (SPSP) 144a Reg S 3(c)7 CAT 2 5yr (11/21/29) senior unsecured registered global MTNs. Aa1/AA+. BOC/BNP/DBS/MS(B&D). UOP: To finance SP Group’s capital and operating expenditures, indebtedness and borrowings, or to finance or refinance acquisitions and/or investments by any member of SP Group and for general corporate purposes. Guarantor: State owned Singapore Power Ltd. Denoms 250k x 1k. NY Law. SGX-ST Listing. Netroadshow: https://www.netroadshow.com/nrs/home/#!/?show=f4920133 (Recommended) or Visit www.netroadshow.com and enter the deal entry code: Aubergine2024 (not case-sensitive). S/D 11/21 (SSA) |
| IPT(s) | GUIDANCE | LAUNCHED | PRICED |
| +75 area | +45# | $700m 11/21/29 +45 | $700m 4.625% 11/21/29 99.546 4.728% +45 (TSY 4.125% 10/31/29) |
| BOOKS: | $3.6bln |
| NIC(s): | N/A |
| COMP(s): | N/A |
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| VOL | IPT/PX | XCVRD | NIC | TRADING | |
| (TODAY) 11/14 | 4,700 | -32 | 3.83 | 1.00 | 0.00 |
| WK ENDING 11/15/24 | 46,350 | -27 | 3.36 | 1.21 | 0.00 |
| WK ENDING 11/08/24 | 1,900 | -22 | 2.82 | -1.33 | 0.00 |
| WK ENDING 11/01/24 | 27,450 | -24 | 2.80 | 2.69 | 0.11 |
| WK ENDING 10/18/24 | 12,100 | -29 | 3.06 | 2.67 | -1.62 |
| WK ENDING 10/18/24 | 26,300 | -26 | 2.39 | 0.00 | -2.06 |
| WK ENDING 10/11/24 | 16,050 | -26 | 2.40 | 2.13 | -4.11 |
| WK ENDING 10/04/24 | 15,450 | -29 | 4.51 | 0.05 | -5.86 |
| WK ENDING 09/27/24 | 37,000 | -28 | 3.39 | 1.28 | -1.26 |
| WK ENDING 09/20/24 | 14,400 | -29 | 4.79 | 2.76 | -4.47 |
| WK ENDING 09/13/24 | 38,225 | -26 | 3.24 | 4.40 | -1.64 |
| WK ENDING 09/06/24 | 80,575 | -30 | 3.71 | 2.48 | -0.57 |
| WK ENDING 08/30/24 | 1,550 | -53 | 6.40 | 12.00 | -13.50 |
| WK ENDING 08/23/24 | 22,650 | -27 | 3.99 | 5.04 | -2.96 |
| WK ENDING 08/16/24 | 29,000 | -30 | 4.60 | 1.59 | -3.77 |
| WK ENDING 08/09/24 | 44,970 | -31 | 5.04 | 4.73 | -3.02 |
| WK ENDING 08/02/24 | 31,125 | -23 | 2.97 | 3.67 | 4.89 |
| WK ENDING 07/26/24 | 31,504 | -26 | 3.00 | 3.00 | -1.52 |
| WK ENDING 07/19/24 | 48,100 | -27 | 3.63 | 0.94 | -5.83 |
| WK ENDING 07/12/24 | 18,250 | -27 | 2.85 | 3.46 | -1.30 |
| YTD "ZERO DAYS" | 21 | 2023 / 32 | |||
| YTD FRNS DROPPED | 18 | 2023 / 39 | |||
| 24-Nov | 48,250 | -26.82 | 3.35 | 1.02 | 0.00 |
| 24-Oct | 95,000 | -26.06 | 3.11 | 1.75 | -2.32 |
| 24-Sep | 172,550 | -26.08 | 3.40 | 2.41 | -1.22 |
| 24-Aug | 106,995 | -29.35 | 4.50 | 4.13 | -2.85 |
| 24-Jul | 125,504 | -26.26 | 4.80 | 2.47 | -2.96 |
| 24-Jun | 102,675 | -24.60 | 3.28 | 4.08 | 0.70 |
| 24-May | 136,150 | -29.89 | 3.51 | 1.93 | -0.84 |
| 24-Apr | 106,680 | -23.93 | 4.07 | 1.65 | -1.10 |
| 24-Mar | 142,909 | -25.00 | 3.82 | 1.46 | 0.59 |
| 24-Feb | 199,425 | -26.51 | 3.93 | 1.89 | -1.18 |
| 24-Jan | 195,620 | -25.66 | 3.73 | 2.70 | -2.20 |
| 23-Dec | 24,025 | -23.94 | 3.04 | 5.59 | -2.90 |
| 23-Nov | 100,725 | -25.50 | 3.95 | 7.40 | -5.15 |
| VOL | IPT/PX | XCVRD | NIC | TRADING | |
| 2024 YTD | 1,431,758 | -26.86 | 3.60 | 2.41 | -1.51 |
| 2023 YTD | 1,161,530 | -24.20 | 3.66 | 6.74 | -3.40 |
| 24 VS '23 (% DIF) | 23.30% | -2.66 | -0.06 | -4.33 | 1.89 |
| NOV | NOV VOL | LOW EST | AVE EST | HI EST | DIF (+/-) |
| 2024 | 48,250 | 60,000 | 70,000 | 85,000 | -21,750 |
| 2024 | 2024 YTD | LOW EST | AVE EST | HI EST | DIF (+/-) |
| YTD | 1,431,758 | 156,758 |
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