High Yield Bond Research - August 2, 2019

Posted by Andrew Robartes on Aug 2, 2019 5:01:05 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 ADI  indexes above.) Andrew Robartes
Key Gainers and Losers Volume Leaders
+   Teva Pharmaceutical Industries LTD 3.15% 10/1/2026 + 2.2%
  General Motors Co. 5% 4/1/2035 + 0.2%
-   Rowan Cos Inc. 4.875% 6/1/2022 -3.8%
  Sprint Corp. 7.625% 3/1/2026 -1.8%
EDP Finance BV   4.125% 1/15/2020 Reg S
Sprint Corp.   7.625% 3/1/2026
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.18% 0.14% 0.23% 5.53% 12.20% 12.27%
Mining -0.20% -0.12% -1.48% -2.94% 6.97% 1.53%
Construction -0.01% 0.10% 0.89% 2.92% 11.91% 9.70%
Manufacturing 0.04% 0.16% 0.03% 1.41% 9.27% 7.13%
Transportion, Communication, Electric/Gas 0.05% 0.01% 0.69% 3.06% 11.28% 9.38%
Wholesale -0.07% -0.05% 0.40% 2.51% 11.13% 7.48%
Retail -0.02% -0.01% 0.12% 1.92% 12.50% 9.02%
Finance, Insurance, Real-Estate 0.11% 0.24% 1.06% 3.03% 11.08% 9.24%
Services 0.04% 0.07% 0.53% 2.47% 10.64% 8.49%
Public Administration -0.08% 0.63% 2.06% 5.28% 11.71% 13.30%
Energy -0.15% -0.06% -1.21% -1.94% 7.61% 2.53%
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-08-02T165928.541

New Issues Forward Calendar

1. Freeport-McMoRan Inc. (USD) 5.25% 9/1/2029 (08/01/2019):600MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.25%.

2. Albertsons LLC (USD) 5.875% 2/15/2028 144A (08/01/2019):750MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.88%.

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 08/02/19 participants welcome a $750MM new corporate-bond offering by
iHeartCommunications 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)
SuperValu Inc. (5Y Sen USD MR14)
Atmos Energy Corp. (5Y Sen USD MR14)

unnamed - 2019-08-01T153117.188

Loans and Credit Market Overview


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: Investment Grade, Loans, Analytics, bonds, junk bonds, bond market, market analytics, New Issues, News, Syndicated Bonds, syndicated, research, market update

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