USD Swaps: A more pedestrian bear flattening; 5y through; IG rolls on

Arrows up and down 2 Feb 2021
USTs enjoyed a single digit change on the day for once, in a bear flattening move. IG priced $10bn and the 5y came through, despite weaker stats.

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  • A more pedestrian bear flattening; 5y through; IG rolls on 

  • New issues  


    A more pedestrian bear flattening; 5y through; IG rolls on 

    USTs yields enjoyed a relatively pedestrian bear flattening today amid some sideways volatility, with yields seeing single digit changes for once. The 2y note yield is last 9bps higher in yield at 4.056% while the 10y note yield is last a mere 1.7bp higher at 3.556%. Equities are ending lower (DJIA -0.12%, S&P -0.28% and Nasdaq -0.45%) while banking shares are hovered or dropped back lower (KBW +0.11%, First Republic -5.3%, PacWest -5.3%).


    On the UST supply side, the $43bn 5y auction came through the 1pm bid side by 1.5bps, drawing a rate of 3.665%. The stats were all on the weaker side, however. Indirects (68.5%) and directs (-18.2%) both fell, leaving primary dealers with 13.33% of the pie while the bid-to-cover was unchanged at 2.48x versus last month.


    Meanwhile, in testimony to the Senate, Vice Chairman Barr said that SVB’s interest rate model was “not at all aligned with reality” and that the failure was a “textbook case in mismanagement.” Barr said that the Fed would review if stricter regulations are needed, with for example, tools to follow up on warnings and tougher liquidity rules.


    Swap spreads narrowed in progressively throughout the session in a roughly parallel move across the curve amid mixed volumes. IG new supply priced another $10.125bn across ten issuers, led by multi-tranches by Hyundai Capital America ($2.5bn 3-part) and Lowe's ($3bn 4-part), bringing the March MTD to a more respectable $96bn.


    2s +1.125bps (-1.25bps)*, 3s -13.625bps (-0.375bps), 5s -23.625bps (-0.875bps), 7s -31bps (-0.375bps), 10s -29.75bps (unch), 20s -68.75bps (-0.125bps), 30s -76.5bps (-0.75bps).


    *adjusted for the 4bp roll



    New issues


    • LABL Inc. is working on a $300m 5.5NC2.5 deal via GS, BofA, Barclays, WFS, DB, RBC, UBS, HSBC, BNPP, MUFG, BMO, MIZ, Truist, USB, Citi and CS.  Pricing tomorrow.


    • Hyundai Capital America launched a $2.5bn 3-part ($1.2bn 3y, $800m 5y and $500m 7y). Leads Barclays (B&D), CA, JPM, MUF, RBC and TD. +175bps, +200bps, +225bps. It dropped plans for a 3y FRN.


    • Virginia Electric & Power priced a $1.5bn 2-part ($750m 10y and $750m 30y). Leads Barclays, MIZ, MUFG, Scotia, SMBC and TD.  A2/BBB+/A-.  +150bps, +175bps.


    • Lowe's (Baa1/BBB+) priced a $3bn 4-part ($1bn 3y, $1bn 10y, $500m 30y and $500m 40y). Leads BofA, Citi, JPM and Mizuho. +95bps, +160bps, +200bps, +210bps.


    • Southwestern Electric Power priced a $350m 10y deal via GS, SMBC and WFS.  Baa2/A-/BBB+. +178bps.


    • Rexford Industrial priced a $300m 5y deal via JPM, PNC and WFC.  Baa2/BBB+/BBB+.  +160bps.


    • AIA Group priced a $600m 10y. Leads Credit Ag, MS, Standard Chartered, BNPP, Deutsche, WFC. +145bps.


    • Pennsylvania Electric priced a $300m 3y deal via Barclays, MUFG and USB.  Baa1/BBB/BBB+. +140bps.


    • Pacific Life GF II priced a $400m 5y FA-backed deal via Citi, GS, JPM and MIZ.  Aa3/AA-/AA-.  +135bps.


    • Metropolitan Edison Co. priced a $425m 5y deal via Barclays, MUFG and USB.  A3/BBB/BBB+. +160bps.


    • Pacific Gas & Electric priced a $750m 30y sustainability FMB benchmark via BofA, BMO, BNPP and WFS.  Baa3/BBB-/BBB.  +295bps.


    • Bank Mandiri priced a $300m 3y at Treasuries +183bps via Citi, HSBC (B&D), JPM, Mandiri, MUFG and StanChart.


    • Poland (A2/A-) priced a $2.5bn 10y and $2.5bn 30y bonds at Treasuries +140 and +180bps. Leads are BNPP, Citi (B&D), GS and JPM.