High Yield Bond Research - July 23, 2019

Posted by Pierre Robert on Jul 23, 2019 5:23:04 PM
SOVEREIGN BENCHMARKS yields in Europe, Canada and United States were noticeably higher. The UK yield curve were sharply lower as Boris Johnson was voted Tory leader and Prime Minister. Boris Johnson has vowed to get Brexit done this fall and investors are noticeably worried that it may be done  in a destructive manor. The 10-year note rose 2.5 basis points. S&P -0.62%, DOW -0.25, NASDAQ -0.74%.
unnamed - 2019-07-18T170855.947

A MAJOR LAWSUIT WAS FILED against Walmart, Walgreens, CVS, Rite Aid and other superstores and chain drugstores for their corporate complicity in the opioid epidemic. CVS Health Corp (USD) 4.3% 3/25/2028, Wal-Mart Stores Inc. (USD) 2.85% 6/23/2020, CVS Health Corp (USD) 5.05% 3/25/2048 and CVS Health Corp. (USD) 2.8% 7/20/2020 were among the largest traded bonds by volume over the last several days. ADI proprietary index data showed a net yield increment for High Grade versus high-yield bondsHigh-Yield edged out High-Grade.  Among high-yield bonds showing topmost price gains at appreciable volumes traded, Southern California Gas (USD) 4.125% 6/1/2048 made analysts' 'Conviction Buy' lists. (See the chart for ADI index above.) Pierre Robert

Key Gainers and Losers Volume Leaders
+   Morgan Stanley VAR% 1/23/2030 + 0.1%
  United Technologies Corp. 4.125% 11/16/2028 + 0.4%
-   CVS Health Corp. 2.8% 7/20/2020 -0.1%
Caterpillar Financial Services Corp.   2.1% 1/10/2020
General Electric Co.   FLT% PERP (1)
Bank of Nova Scotia   3.3125% 8/31/2085
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.04% -0.46% 0.36% 5.68% 13.51% 14.65%
Mining -0.01% -1.39% -1.47% -3.49% 6.39% 1.10%
Construction -0.02% 0.10% 0.53% 2.95% 11.24% 8.79%
Manufacturing -0.04% -0.31% 0.02% 1.72% 9.31% 7.41%
Transportion, Communication, Electric/Gas 0.08% 0.04% 0.38% 2.81% 10.58% 8.67%
Wholesale 0.01% -0.07% 0.34% 2.49% 10.55% 7.49%
Retail 0.04% -0.05% 0.19% 3.00% 12.39% 9.80%
Finance, Insurance, Real-Estate 0.02% 0.10% 0.77% 2.73% 10.48% 9.04%
Services 0.00% 0.02% 0.12% 2.48% 9.82% 8.50%
Public Administration -0.08% -0.18% 1.04% 4.02% 10.18% 12.91%
Energy -0.03% -1.29% -1.22% -2.37% 7.03% 2.06%
 
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-07-23T171907.606

New Issues Forward Calendar

1. Tampa Electric Co. (USD) 3.625% 6/15/2050 (07/22/2019): 300MM Senior Unsecured Notes, Price at Issuance 98.774, Yielding 3.69%.

2. FedEx Corp. (USD) 3.1% 8/5/2029 (07/22/2019): 1000MM Senior Unsecured Notes, Price at Issuance 99.666, Yielding 3.14%.

1. LIONSGATE: $3.6 billion bond and bank financing. Expected 3rd Quarter 2016.

2. CALLON PETROLEUM CO.: $350 million senior notes due 2024. Expected 3rd Quarter 2016.

3. FERRO CORP: $200 million offering senior notes due 2016, expected week of July 21, 2008.

Additional Commentary


NEW ISSUANCE WATCH: on 7/23/19 participants welcome a $750MM new corporate-bond offering by JBS Investments GmbH The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 7/19/19, with a net inflow of $570MM, six week total $7.4B flowed into high-yield.
 
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 - 2019-07-18T170629.635

Loans and Credit Market Overview


SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, 
notable secondary activity: 
  • NGPL Pipeco LLC, Whatabrands LLC,Electricite de France, STAG Industrial Inc.
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 22 bp (basis points), as of 07/23/19
  • 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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