Advantage Data High Yield Bond Market Summary

Investment Grade Bond Research - May 13, 2019

Posted by Andrew Robartes on May 13, 2019 5:17:37 PM
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STOCKS PLUMMETED MONDAY MORNING as China retaliated with movements to raise tariffs on $60 billion worth of U.S. goods. Starting June 1, Chinese officials say tariffs will be raised to as high as 25%on products that currently face levies of 5-10%. All three major indices dropped at least 2% amid the continued trade tensions, with the NASDAQ falling 3.41%. Crude Oil was down 1.3%. S&P -2.41%, Dow-2.38%, NASDAQ -3.41%.

INCREASED DEMAND FOR SAFER ASSETS caused a large dip in 10-Year U.S. Treasury yields, which sank 6.3 basis points to 2.405%. Treasury Yields, which have been falling since trade tensions with China escalated last week, are at their lowest since March. With respect to the U.S.-China trade uncertainty, Ian Lyngen, head of U.S. government bond strategy says “Regardless of the motive, its effect has been nervousness in the equity market and a flight-to-quality in Treasurys”. At this point, there is a focus on what China will do with U.S. government debt, and whether movement in the value of the yuan will effect this. ADI proprietary index data showed a net yield increment for high-yield versus high-grade bonds. High-grade edged out high-yield. Among high-grade bonds showing topmost price gains at appreciable volumes traded, Prudential Financial Inc (USD) 6.625% 12/1/2037 made analysts' 'Conviction Buy' lists. (See the chart for  Prudential Financial Inc (USD) 6.625% 12/1/2037 below.) Andrew Robartes (arobartes@advantagedata.com).

Key Gainers and Losers Volume Leaders
+   Comcast Corp. 4.15% 10/15/2028 + 0.2%
  Apple Inc. 3.45% 5/6/2024 + 0.4%
-   Microsoft Corp. 3.7% 8/8/2046 -0.0%
Comcast Corp.   4.15% 10/15/2028
Vodafone Group PLC   5.25% 5/30/2048
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.30% 1.09% 1.42% 3.22% 5.59% 4.74%
Mining -0.01% 0.01% 0.16% 2.69% 5.87% 6.07%
Construction -0.03% 0.30% 0.69% 2.65% 3.95% 5.71%
Manufacturing -0.02% 0.10% 0.38% 2.31% 4.54% 5.44%
Transportion, Communication, Electric/Gas -0.03% 0.16% 0.62% 3.33% 5.87% 7.71%
Wholesale 0.01% 0.12% 0.61% 2.73% 5.56% 5.89%
Retail -0.08% 0.06% 0.25% 2.21% 4.64% 5.83%
Finance, Insurance, Real-Estate -0.03% 0.15% 0.45% 2.19% 4.09% 5.84%
Services -0.03% 0.15% 0.22% 2.12% 4.27% 6.20%
Public Administration -0.00% 0.13% 0.38% 1.21% 1.68% 4.06%
Energy -0.05% -0.03% 0.15% 2.83% 6.20% 8.00%
 
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-05-13T171458.141

New Issues New Issues [Continued]

1. Rsse Stephens Properties Limited Partnership (USD) FLT% 5/1/2029 (05/13/2019): 175MM Secured Notes, Price at Issuance 100.

 

Additional Commentary

NEW ISSUANCE WATCH: on 5/13/19 participants welcome a $175MM new corporate-bond offering by RSSE Stephens Properties Limited Partnership. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 5/10/19, with a net outflow of $212MM, year-to-date $13.6B 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 XR14)
Road King Infrastructure LTD (5Y Sen USD MR14)
Cable & Wireless Communication (5Y Sen USD CR14)

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Loans and Credit Market Overview

SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, notable secondary activity:
  • Oryx Midstream, Hargray Communications Group Inc., Rikshem AB, Broadcom LTD
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 11 bp (basis points), as of 05/13/19
  • 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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