High Yield Bond Research - August 27, 2019

Posted by Corey Mahoney on Aug 27, 2019 5:09:00 PM
ALTRIA BONDS SPIKE following confirmed merger talks with Phillip Morris discussing an all-stock merger reuniting the two companies. “With disruption facing the world of tobacco, we can see some merit in a re-merger.” Gold advanced 0.92 percent closing at $1551.3 per ounce. The 10-year note lost 5.5 basis points.  S&P -0.18%, DOW -0.31, NASDAQ -0.22%.
U.S. HOME PRICES DECELERATED for the fifteenth straight month posting a 3.1 percent year-over-year gain down from 3.3 percent in May. “Home price gains continue to trend down, but maybe leveling off to a sustainable level.” Despite lower mortgage rates buyers have not been enticed enough to move the pendulum 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, Altria Group Inc. (USD) 3.875% 9/16/2046 made analysts' 'Conviction Buy' list. (See the chart below for Altria Group bonds below.) Corey Mahoney
Key Gainers and Losers Volume Leaders
+   United States STL Corp. New 6.25% 3/15/2026 + 2.3%
  Frontier Communications Corp. 11% 9/15/2025 + 2.1%
-   Teva Pharmaceutical Industries LTD 2.8% 7/21/2023 -0.0%
Petrobras Global Finance BV   6.85% 6/5/2115
Frontier Communications Corp.   11% 9/15/2025
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.01% 0.25% 0.50% 6.74% 12.71% 13.48%
Mining -0.05% 0.76% -3.25% -3.68% 4.63% -0.72%
Construction 0.01% 0.22% 1.11% 4.77% 12.89% 9.71%
Manufacturing 0.02% 0.46% 0.46% 2.73% 10.25% 7.34%
Transportion, Communication, Electric/Gas 0.05% 0.34% 0.47% 4.18% 12.34% 8.84%
Wholesale -0.01% 0.15% -0.25% 2.65% 10.56% 6.79%
Retail 0.01% 0.12% -0.43% 2.87% 13.02% 9.48%
Finance, Insurance, Real-Estate 0.00% 0.31% 0.65% 3.84% 11.79% 9.65%
Services 0.04% 0.44% 0.68% 3.31% 11.35% 8.74%
Public Administration -0.28% -0.17% 1.13% 4.72% 12.53% 15.10%
Energy -0.00% 1.03% -1.74% -1.78% 6.90% 1.57%
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-08-27T170600.635

New Issues Forward Calendar

(None Current 08/27/2019)


1. Sinclair Broadcast Group Inc.: $2.55B, seven-year senior secured notes; $2.325B eight year senior unsecured notes

2. General Electric Distributed Power: $600M high-yield bonds, Expected Q3 2019

Additional Commentary

NEW ISSUANCE WATCH: on 08/26/19 participants welcome a $750M new corporate-bond offering by
Texas Instruments Inc. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 8/16/19, with a net outflow of  $4.07B.
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)
Cable & Wireless Communication (5Y Sen USD CR14)
SuperValu Inc. (5Y Sen USD MR14)

unnamed - 2019-08-01T153117.188

Loans and Credit Market Overview


Deals recently freed for secondary trading, 
notable secondary activity: 
  • PaySimple Inc., Nike Inc., US Foods Inc., Duerre Group, Albertsons LLC, Helical PLC
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 was 19 bp (basis points), as of 08/27/19
  • 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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