JUNK BONDS ROSE AGAINST INVESTMENT GRADE debt in net prices linked to actual trades as a risk-on sentiment continues. Margaret Patel, a senior portfolio manager at Wells Fargo, sees further gains in the high yield market, “The risk-taker will be rewarded” thanks to the Feds patient stance on monetarypolicy. The 10-year note dipped 0.4 basis points. S&P -0.03%, DOW -0.05, NASDAQ -0.01%.
PRODUCER PRICES SLIGHTLY ADVANCED IN MAY following a surge in the cost of hospitality accommodations. Inflation should remain subdued given recent data,
“The report suggests limited pipeline inflationary pressures.” Gig workers or
“side hustlers” have
revolutionized the labor forceand the U.S. economy. The government is in a debate on whether to treat the workers as
contractors or employees. It is estimated
36 percent of the workforce are classified as gig workers earning a combined for
$1.4 trillion in 2018. ADI proprietary index data showed a net
yield increment for high-yield versus high-grade bonds. High-yield edged out high-grade. Among high-yield bonds showing topmost price gains at appreciable volumes traded,
General Motors Co. (USD) 5% 4/1/2035 made analysts' 'Conviction Buy' lists. (See the chart for
General Motors Co. bonds below.)
Corey Mahoney (
cmahoney@advantagedata.com).
| Key Gainers and Losers |
Volume Leaders |
| + |
HCA Inc. 5.25% 4/15/2025 |
+ 0.5% |
| |
Staples Inc. 7.5% 4/15/2026 144A |
+ 1.3% |
| - |
Sprint Capital Corp. 6.875% 11/15/2028 |
-1.5% |
|
Stericycle Inc. 5.375% 7/15/2024 144A
Intelsat Jackson Hldg SA 9.75% 7/15/2025 144A
|
| Industry Returns Tracker |
| Industry |
Past Day |
Past Week |
Past Month |
Past Quarter |
YTD |
Past Year |
| Agriculture, Forestry, Fishing |
0.16% |
0.83% |
1.02% |
2.07% |
7.74% |
10.56% |
| Mining |
0.14% |
0.53% |
-1.91% |
0.57% |
6.84% |
1.66% |
| Construction |
0.08% |
0.94% |
0.93% |
3.91% |
8.63% |
6.49% |
| Manufacturing |
0.18% |
1.13% |
0.12% |
2.40% |
7.65% |
6.03% |
| Transportion, Communication, Electric/Gas |
0.10% |
0.83% |
1.22% |
3.69% |
8.62% |
7.63% |
| Wholesale |
0.13% |
1.15% |
0.83% |
3.09% |
8.87% |
5.55% |
| Retail |
0.20% |
1.26% |
0.25% |
4.73% |
10.76% |
7.78% |
| Finance, Insurance, Real-Estate |
0.14% |
0.90% |
0.69% |
3.02% |
8.60% |
7.87% |
| Services |
0.15% |
1.22% |
1.01% |
3.12% |
8.96% |
8.04% |
| Public Administration |
0.43% |
0.74% |
1.26% |
2.54% |
7.95% |
13.25% |
| Energy |
0.10% |
0.41% |
-1.80% |
0.65% |
6.77% |
1.57% |
| |
| Total returns (non-annualized) by rating, market weighted. |
|
| New Issues |
Forward Calendar |
|
1. Graphic Packaging International Inc. (USD) 4.75% 7/15/2027 144A (06/11/2019): 300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.75%.
2. Hilton Domestic Operating Co. (USD) 4.875% 1/15/2030 144A (06/11/2019): 1000MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.88%.
|
1. Diamondback Energy Inc.: High-yield notes, Expected Q2 2019
2. Harsco Corp.: Unsecured Debt, Expected Q3 2019
|
Additional Commentary
NEW ISSUANCE WATCH: on 6/11/19 participants welcome a $1000MM new corporate-bond offering by Hilton Domestic Operating Co. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 6/7/19, with a net outflow of $3.2B, year-to-date $6.6B flowed into high-yield.
| Top Widening Credit Default Swaps (CDS) |
Top Narrowing Credit Default Swaps (CDS) |
Hertz Corp. (5Y Sen USD XR14)
Hovnanian Enterprises Inc. (5Y Sen USD MR14) |
Cable & Wireless Communication (5Y Sen USD CR14)
SuperValu Inc. (5Y Sen USD MR14) |
Loans and Credit Market Overview
SYNDICATED LOANS HIGHLIGHTS:
Deals recently freed for secondary trading, notable secondary activity:
- United PF Holdings LLC, Packers Holdings, Charles Schwab Corp., Tundra Energy Marketing
Long-term bond yields are expected to hit a cyclical peak in 2019 given tight fiscal policy and lagging global economies. Europe remains checked by stubbornly low inflationary forces. Positive effects remained in force:
- TED spread held below 17 bp (basis points), as of 06/11/19
- Net positive capital flows into high-yield ETFs & mutual funds
Copyright 2019 Advantage Data Inc. All Rights Reserved. http://www.advantagedata.com
Information in this document should not be regarded as an offer to sell or solicitation of an offer to buy bonds or any financial instruments referred to herein. All information provided in this document is believed to be accurate. However, Advantage Data and its sources make no warranties, either express or implied, as to any matter whatsoever, including but not limited to warranties of merchantability or fitness for a particular purpose. Opinions in this document are subject to change without notice. Electronic redistribution, photocopying and any other electronic or mechanical reproduction is strictly prohibited without prior written permission from Advantage Data Inc.
.png)
