High Yield Bond Research - July 10, 2019

Posted by Corey Mahoney on Jul 10, 2019 5:04:42 PM
JEROME POWELL SIGNALED A RATE CUT IS LIKELY IN JULY citing the Fed will “act as appropriate to sustain the expansion” despite global weakness and the ongoing trade spat. “Manufacturing, trade and investment are weak all around the world ... We have agreed to begin (trade) discussions again with China, and that is a constructive step. It doesn’t remove the uncertainty.”  Gold rallied 1.33 percent following Powell’s dovish remarks and the major indices finished near all-time highs. The 10-year note dipped 0.3 basis points.  S&P +0.45%, DOW +0.29, NASDAQ +0.77%
THE FED IS CONCERNED slowing global economies will hinder the US economy pointing to a reduction in business investment within the manufacturing industry.  “Economic momentum appears to have slowed in some major foreign economies, and that weakness could affect the U.S. economy.” Mortgage applications fell 2.4 percent week-over-week despite rates hovering near two-year lows, “Borrowers have been less sensitive to low rates.”  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, Buckeye Partners LP (USD) 3.95% 12/1/2026
made analysts' 'Conviction Buy' lists. (See the chart for ADI Indices above.) Corey Mahoney (cmahoney@advantagedata.com).
Key Gainers and Losers Volume Leaders
+   Petrobras Global Finance BV 7.375% 1/17/2027 + 0.1%
  Petrobras Global Finance BV 8.75% 5/23/2026 + 0.3%
-   Petrobras Global Finance BV 6.85% 6/5/2115 -0.3%
Teva Pharmaceutical Industries LTD   3.15% 10/1/2026
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.01% 0.06% 5.02% 5.20% 11.41% 13.47%
Mining -0.33% -0.60% -0.00% -1.83% 6.98% 1.52%
Construction -0.04% -0.04% 1.55% 3.04% 10.46% 8.43%
Manufacturing -0.11% -0.09% 1.59% 2.21% 9.44% 7.86%
Transportion, Communication, Electric/Gas -0.16% -0.16% 1.54% 3.04% 10.17% 9.08%
Wholesale -0.07% 0.02% 1.70% 2.85% 10.40% 7.66%
Retail -0.11% -0.08% 1.51% 3.50% 12.13% 9.84%
Finance, Insurance, Real-Estate -0.09% -0.09% 1.57% 2.65% 10.09% 9.38%
Services -0.10% -0.11% 1.19% 2.43% 9.87% 9.04%
Public Administration 0.12% 0.23% 2.40% 3.69% 10.05% 13.88%
Energy -0.33% -0.62% 0.05% -0.84% 7.39% 2.17%
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-07-10T170326.313

New Issues Forward Calendar

1. Micron Technology Inc. (USD) 4.663% 2/15/2030 (07/10/2019):850MM Senior Unsecured Notes, Price at Issuance 99.994, Yielding 4.66%.

2. Micron Technology Inc. (USD) 4.185% 2/15/2027 (07/10/2019):900MM Senior Unsecured Notes, Price at Issuance 99.995, Yielding 4.19%.

1. Twinset Spa: ¬170M 5 year senior secured floating-rate notes, Expected Q2 2019

2. E.W. Scripps: $1.85B term loans and unsecured debt, Expected Q2 2019

Additional Commentary

NEW ISSUANCE WATCH: on 7/10/19 participants welcome a $850MM new corporate-bond offering by Micron Technology Inc. . The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 6/21/19, with a net outflow of $602MM, year-to-date $8.9B 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 CR14)
SuperValu Inc. (5Y Sen USD MR14)
San Miguel Corp. (5Y Sen USD CR14)
unnamed - 2019-06-27T171147.709

Loans and Credit Market Overview


Deals recently freed for secondary trading, 
notable secondary activity: 
  • Heritage Power, LLC, Piaggio & C. SpA, Goshawk Aviation Ltd, Valence Surface Technologies
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 10 bp (basis points), as of 07/10/19
  • Net positive capital flows into high-yield ETFs & mutual funds 

Copyright 2019 Advantage Data Inc. All Rights Reserved. http://www.advantagedata.com

Information in this document should not be regarded as an offer to sell or solicitation of an offer to buy bonds or any financial instruments referred to herein. All information provided in this document is believed to be accurate. However, Advantage Data and its sources make no warranties, either express or implied, as to any matter whatsoever, including but not limited to warranties of merchantability or fitness for a particular purpose. Opinions in this document are subject to change without notice. Electronic redistribution, photocopying and any other electronic or mechanical reproduction is strictly prohibited without prior written permission from Advantage Data Inc.

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

Are you using AdvantageData?

AdvantageData is your fixed income solution for pricing, analytics, reports, and insight on approximately:

  • 500,000+ U.S. and international corporate bonds
  • Over 6,200+ CDS reference entities
  • Over 22,000+ syndicated loans
  • Over 100 equity markets worldwide
  • One platform 16 products and services from debt to CDS to loans to mid-market
  • Used by top buy and sell-side firms worldwide

Subscribe to Email Updates

Recent Posts