Investment Grade Bond Research - August 2, 2019

Posted by Andrew Robartes on Aug 2, 2019 5:03:27 PM
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THE US ADDED 164,000 JOBS IN JULY according to the Department of Labor, just below the expected figure of 165,000. The unemployment rate remained unchanged at 3.7%. Despite the report of steady job growth, stocks fell again today as investors continue to focus on trade threats. The 10-Year Treasury note fell to 1.846%, its lowest yield in nearly 3 years. S&P -0.73%, DOW -0.37%, NASDAQ -1.32%.

IN THE CORPORATE BOND SPACE, iHeartMedia, Inc. priced an upsized offering of $750 million worth of senior secured notes through its wholly-owned subsidiary, iHeartCommunications, Inc. The notes, which mature in 2027, yield 5.25% and will be guaranteed by iHeartMedia. The American mass media company plans to use the proceeds to prepay a portion of outstanding borrowings, and pay interest and fees. ADI proprietary index data showed a net yield increment for high-grade versus high-yield bondsHigh-grade edged out high-yield.  Among high-grade bonds showing topmost price gains at appreciable volumes traded, Microsoft Corp. (USD) 3.75% 5/1/2043 made analysts' 'Conviction Buy' lists. (See the chart for Microsoft Corp. below.) Andrew Robartes 
 
Key Gainers and Losers Volume Leaders
+   Goldman Sachs Group Inc. VAR% 5/1/2029 + 0.9%
  Vodafone Group PLC 4.125% 5/30/2025 + 0.3%
-   Apple Inc. 2.1% 9/12/2022 -0.0%
  Wells Fargo & Co. 4.15% 1/24/2029 -0.2%
Goldman Sachs Group Inc.   6.75% 10/1/2037
IBM Corp.   3.5% 5/15/2029
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.36% 0.41% 0.03% 3.40% 8.99% 8.91%
Mining 0.48% 0.69% 0.70% 3.81% 10.57% 9.65%
Construction 0.55% 0.89% 1.28% 4.48% 8.43% 8.78%
Manufacturing 0.50% 0.70% 0.96% 4.34% 8.92% 8.50%
Transportion, Communication, Electric/Gas 0.60% 0.92% 1.28% 5.42% 11.48% 12.03%
Wholesale 0.47% 0.64% 0.91% 4.07% 9.82% 9.39%
Retail 0.61% 0.76% 1.00% 4.67% 9.57% 9.59%
Finance, Insurance, Real-Estate 0.44% 0.57% 0.83% 3.49% 7.75% 8.55%
Services 0.57% 0.70% 0.87% 4.40% 8.67% 9.24%
Public Administration 0.49% 0.61% 0.57% 2.30% 3.86% 5.70%
Energy 0.46% 0.61% 0.62% 3.81% 10.71% 11.16%
 
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-08-02T165931.392

New Issues New Issues [Continued]

1. Crown Castle Intl Corp. (USD) 3.1% 11/15/2029 (08/01/2019):550MM Senior Unsecured Notes, Price at Issuance 99.811, Yielding 3.12%.

2. Southern California Edison Co. (USD) 2.85% 8/1/2029 (08/01/2019): 400MM Secured Notes, Price at Issuance 99.845, Yielding 2.87%.

 

Additional Commentary


NEW ISSUANCE WATCH: on 8/02/19 participants welcome $550 million in new corporate-bond offerings by
Ryder System Inc. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 7/26/19, with a net inflow of $1.3B, Seven week total $9.0B flowed into high-yield. 
 
Top Widening Credit Default Swaps (CDS) Top Narrowing Credit Default Swaps (CDS)
Rite Aid Corp. (5Y Sen USD XR14)
Weatherford International LTD (5Y Sen USD MR14)
Cable & Wireless Communication (5Y Sen USD CR14)
SuperValu Inc. (5Y Sen USD MR14)

unnamed - 2019-08-01T153123.074

Loans and Credit Market Overview


SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, notable secondary activity:
  • Helical PLC, London Stock Exchange Group PLC, Maxamcorp Holding SL
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 21 bp (basis points), as of 08/02/19
  • Net positive capital flows into high-yield ETFs & mutual funds

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Topics: High Yield, Investment Grade, Loans, Analytics, bonds, junk bonds, bond market, market analytics, New Issues, Finance, Fixed Income, News, Syndicated Bonds, syndicated, research, market update


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