High Yield Bond Research - August 9, 2019

Posted by Pierre Robert on Aug 9, 2019 5:20:14 PM
CHINA LET THE YUAN trade below the 7 Yuan to a dollar peg sending stocks and bonds lower.  Markets cap the worst week in over 7 years. Similarly, the 10-Year Treasury note rose to 1.735%. S&P +1.88%, DOW+1.44%, NASDAQ +2.28%.
CHESAPEAKE ENERGY CORP  had a terrible week! Their stock was down 17.6% and the bonds were noticeably lower. 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.) Pierre Robert
 
Key Gainers and Losers Volume Leaders
+   GEO Group 5.125% 4/1/2023 + 0.6%
  Teva Pharmaceutical Industries LTD 2.2% 7/21/2021 + 0.4%
  GEO Group 5.875% 1/15/2022 + 0.3%
-   HCA Inc. 4.75% 5/1/2023 -0.2%
  Murphy Oil Corp. 5.75% 8/15/2025 -0.8%
HCA Inc.   4.75% 5/1/2023
Mattel Inc.   4.35% 10/1/2020
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.53% -0.08% -0.08% 6.17% 12.20% 12.10%
Mining 0.40% -3.07% -3.95% -5.21% 3.98% -1.31%
Construction 0.11% -0.26% 0.67% 3.07% 11.72% 8.76%
Manufacturing 0.26% -0.34% -0.22% 1.60% 9.51% 7.05%
Transportion, Communication, Electric/Gas 0.32% -0.36% 0.43% 3.23% 11.39% 8.47%
Wholesale 0.15% -0.52% -0.18% 2.19% 10.54% 6.56%
Retail 0.34% -0.74% -0.05% 1.34% 11.60% 7.99%
Finance, Insurance, Real-Estate 0.24% -0.24% 0.79% 3.02% 11.08% 9.18%
Services 0.33% -0.24% 0.43% 2.49% 10.61% 8.30%
Public Administration 0.32% 0.32% 1.95% 5.04% 12.07% 13.77%
Energy 0.27% -2.80% -3.62% -4.22% 4.70% -0.23%
 
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-08-09T171858.948

New Issues Forward Calendar

1. NCR Corp. (USD) 5.75% 9/1/2027 Reg S (08/08/2019): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.75%.

2. Clear Channel Worldwide Holdings Inc. (USD) 5.125% 8/15/2027 Reg S (08/09/2019): 1250MM First Lien Notes, Price at Issuance 100, Yielding 5.13%.

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

2. Twinset Spa: ¬170M 5 year senior secured floating-rate notes, Expected Q3 2019

Additional Commentary


NEW ISSUANCE WATCH: on 08/09/19 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 8/2/19, with a net outflow of $115 MM, $1.3 billion outflow the prior week.
 
Top Widening Credit Default Swaps (CDS) Top Narrowing Credit Default Swaps (CDS)
Rite Aid Corp. (5Y Sen USD MR14)
Hertz Corp. (5Y Sen USD CR14)
Road King Infrastructure LTD (5Y Sen USD CR14)
SuperValu Inc. (5Y Sen USD MR14)

unnamed - 2019-08-01T153117.188

Loans and Credit Market Overview


SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, 
notable secondary activity: 
  • Duerre Group, Albertsons LLC, Helical PLC, London Stock Exchange Group 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 held below 17 bp (basis points), as of 08/09/19
  • 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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