THE MARKETS ROSE THEN FELL SHARPLY TODAY after the White House announced an additional 10% Tariff on Chinese goods beginning next month. The news came after a 300 point rebound from Wednesday’s interest rate cut-related losses.The 10-Year US Treasury note fell 11.3 basis points. S&P -0.90%, DOW -1.05%, NASDAQ -0.79%
IN THE CORPORATE BOND SPACE, Ryder System Inc. (NYSE: R) priced $550 million worth of senior unsecured notes that will yield 2.5% and mature on September 1, 2024. This pricing comes 2 days after the transportation and supply chain management company reported record high Q2 revenue. According to CEO Robert Sanchez, “Despite a softer freight environment compared to 2018, we delivered double-digit operating revenue growth driven by strong performance in our contractual dedicated transportation, supply chain and lease businesses”. ADI proprietary index data showed a net yield increment for high-grade versus high-yield bonds. High-grade edged out high-yield. Among high-grade bonds showing topmost price gains at appreciable volumes traded, MetLife Inc. (USD) 2.463% 12/15/2044 made analysts' 'Conviction Buy' lists. (See the chart for ADI indexes above.) Andrew Robartes
| Key Gainers and Losers |
Volume Leaders |
| + |
Petrobras Global Finance BV 6.85% 6/5/2115 |
+ 0.9% |
| |
Discover Financial Services 4.1% 2/9/2027 |
+ 0.6% |
| - |
Dish DBS Corp. 7.75% 7/1/2026 |
-3.5% |
| |
Antero Resources Corp. 5.125% 12/1/2022 |
-1.3% |
|
Discover Financial Services 4.1% 2/9/2027
Western Digital Corp. 4.75% 2/15/2026
|
| Industry Returns Tracker |
| Industry |
Past Day |
Past Week |
Past Month |
Past Quarter |
YTD |
Past Year |
| Agriculture, Forestry, Fishing |
-0.05% |
-0.25% |
-0.05% |
5.31% |
11.98% |
12.26% |
| Mining |
0.30% |
-0.10% |
-1.63% |
-2.99% |
6.93% |
0.98% |
| Construction |
0.05% |
0.09% |
0.80% |
2.88% |
11.67% |
9.41% |
| Manufacturing |
0.02% |
0.17% |
0.06% |
1.51% |
9.50% |
7.23% |
| Transportion, Communication, Electric/Gas |
0.10% |
0.06% |
0.60% |
3.04% |
11.18% |
8.71% |
| Wholesale |
-0.02% |
0.05% |
0.54% |
2.72% |
11.13% |
7.81% |
| Retail |
-0.03% |
0.07% |
0.28% |
2.24% |
12.87% |
9.47% |
| Finance, Insurance, Real-Estate |
0.04% |
0.12% |
0.88% |
2.84% |
11.05% |
8.94% |
| Services |
0.01% |
0.07% |
0.51% |
2.40% |
10.16% |
8.17% |
| Public Administration |
0.52% |
0.93% |
2.16% |
5.38% |
11.81% |
13.05% |
| Energy |
0.30% |
-0.06% |
-1.48% |
-2.12% |
7.46% |
1.92% |
| |
| Total returns (non-annualized) by rating, market weighted. |
|
| New Issues |
Forward Calendar |
|
1. Advisor Group (USD) 10.75% 8/1/2027 144A (07/31/2019): 350MM Senior Unsecured Notes, Price at Issuance 96.14, Yielding 11.49%.
|
1. DDM Holding AG: ¬100MM, Expected Q3 2019
2. General Electric Distributed Power: $600M high-yield bonds, Expected Q3 2019
|
Additional Commentary
NEW ISSUANCE WATCH: on 7/31/19 participants welcome a $350MM new corporate-bond offering by
Advisor Group. 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) |
Hertz Corp. (5Y Sen USD XR14)
Hovnanian Enterprises Inc. (5Y Sen USD MR14) |
Road King Infrastructure LTD (5Y Sen USD MR14)
Cable & Wireless Communication (5Y Sen USD CR14) |
Loans and Credit Market Overview
SYNDICATED LOANS HIGHLIGHTS:
Deals recently freed for secondary trading, notable secondary activity:
- London Stock Exchange Group PLC, Maxamcorp Holding SL, PLZ Aeroscience Corp.
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 08/01/19
- Net positive capital flows into high-yield ETFs & mutual funds
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