JUNK BONDS PREVAILED AGAINST INVESTMENT-GRADE DEBT in net price gains linked to actual trades as a slight risk-on sentiment returns to the bond market. Investors are progressively becoming bullish on Treasuries as fewer investors are inclined to short Government bonds amid a surprise jump of weak economic data. Equities snapped a six-day win streak the, S&P slipped -0.01%, the Dow settled -0.09% lower, and the NASDAQ rose +0.12%. Gold ticked higher closing above $1,300 an ounce. The 10-year U.S. Treasury note rose 0.8 basis point.
MANUFACTURING ORDERS INCREASED LESS THAN EXPECTED in January as
shipments declinedfor the fourth consecutive month; shipments dipped 0.4 percent while orders edged 0.1 percent higher.
Crude oil touches
multi-month highs on Tuesday,
year to date up 25 percent before settling down -0.36% closing at $58.88 per barrel. According to Andy Lipow, President of Lipow Oil Associates in Houston,
“OPEC and non-OPEC producers are determined to get the supply and demand dynamics into better balance, recognizing U.S. shale production is going to continue to rise”. Members agreed to slash outputs by 800,000 barrels a day from October’s production levels.
ADI proprietary index data showed a net
yield increment for high-yield versus high-grade. High-yield edged out high-grade. Among high-yield bonds showing topmost price gains at appreciable volumes traded,
Pacific Gas & Electric Co. (USD) 3.85% 11/15/2023 made analysts' 'Conviction Buy' lists. (See the chart for
Pacific Gas & Electric Co. below)
Corey Mahoney cmahoney
@advantagedata.com).
| Key Gainers and Losers |
Volume Leaders |
| + |
Tronox Inc. 6.5% 4/15/2026 144A |
+ 1.5% |
| |
Ziggo Secured Finance BV 5.5% 1/15/2027 144A |
+ 0.1% |
| - |
NGPL Pipeco LLC 4.875% 8/15/2027 144A |
-0.4% |
|
SS&C Technologies Inc. 5.5% 9/30/2027 144A
|
| Industry Returns Tracker |
| Industry |
Past Day |
Past Week |
Past Month |
Past Quarter |
YTD |
Past Year |
| Agriculture, Forestry, Fishing |
-0.06% |
0.52% |
1.87% |
5.00% |
4.89% |
4.01% |
| Mining |
0.03% |
0.66% |
0.34% |
4.62% |
6.89% |
2.84% |
| Construction |
-0.10% |
0.68% |
1.01% |
4.41% |
5.29% |
2.97% |
| Manufacturing |
-0.07% |
0.61% |
1.12% |
4.53% |
5.73% |
4.85% |
| Transportion, Communication, Electric/Gas |
-0.05% |
0.69% |
1.54% |
4.37% |
5.52% |
5.00% |
| Wholesale |
-0.09% |
0.32% |
0.67% |
3.98% |
5.53% |
3.61% |
| Retail |
-0.07% |
0.69% |
1.20% |
5.43% |
7.71% |
4.28% |
| Finance, Insurance, Real-Estate |
-0.02% |
0.62% |
1.30% |
4.95% |
5.92% |
5.43% |
| Services |
-0.10% |
0.43% |
1.00% |
5.05% |
6.36% |
5.62% |
| Public Administration |
0.03% |
0.21% |
0.90% |
2.73% |
2.32% |
22.21% |
| Energy |
-0.02% |
0.59% |
0.35% |
4.44% |
6.76% |
2.75% |
| |
| Total returns (non-annualized) by rating, market weighted. |
|
| New Issues |
Forward Calendar |
|
1. Panther BF Aggregator 2 LP Panther Finance Co. Inc. (USD) 6.25% 5/15/2026 144A (03/18/2019): 1000MM Secured Notes, Price at Issuance 100, Yielding 6.25%.
2. Panther BF Aggregator 2 LP Panther Finance Co. Inc. (USD) 8.5% 5/15/2027 144A (03/18/2019): 1950MM Senior Unsecured Notes, Price at Issuance 100, Yielding 8.5%.
|
1. ADT Inc.: $2.75B, Expected Q2 2019
2. Twinset Spa: ¬170M 5 year senior secured floating-rate notes, Expected Q1 2019
|
Additional Commentary
NEW ISSUANCE WATCH: on 3/18/19 participants welcome an $85MM new corporate-bond offering by
Westmoreland Coal Co. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 3/15/19, with a net inflow of $1.0B, year-to-date $8.2B flowed into high-yield.
| Top Widening Credit Default Swaps (CDS) |
Top Narrowing Credit Default Swaps (CDS) |
Weatherford International LTD (5Y Sen USD XR14)
Hertz Corp. (5Y Sen USD CR14) |
SuperValu Inc. (5Y Sen USD XR14)
San Miguel Corp. (5Y Sen USD CR14) |
Loans and Credit Market Overview
SYNDICATED LOANS HIGHLIGHTS:
Deals recently freed for secondary trading, notable secondary activity:
- TruGreen LP, PetVet Care Centers LLC, XPO Logistics Inc., MYOB LTD, Dell International
OVERALL CREDIT MARKET:
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 20 bp (basis points), as of 03/19/19
- Net positive capital flows into high-yield ETFs & mutual funds
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