High Yield Bond Research - July 26, 2019

Written by Corey Mahoney | Aug 1, 2019 6:49:35 PM

U.S. DURABLE GOODS ORDERS SURGED BY 2 PERCENT IN JUNE largely due to an increase in civilian aircraft orders. Core capital goods orders rose 1.9 percent on year-over-year basis suggesting the economy is picking up steam after two months of weak data. “The U.S. economy is stronger todaybecause the rest of the world is in a recession. That’s not the way it’s supposed to work, but that’s the way it’s working now. Because the rest of the world is in a recession, our interest rates are scraping bottom. And because our interest rates are scraping bottom, our economy is actually doing pretty darn well,” said Todd Buchholz, former White House director of economic policy under President George H.W. Bush “Eighty-eight percent of our economy has pretty much nothing at all to do with exports or imports.”

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T-MOBILE AND SPRINT RECEIVE APPROVAL from the Department of Justice to continue with the merger of the two companies. Under the agreement, Sprint will have to divest its Boost Mobile and Virgin Mobile brands to Dish Network Corp. Subsequent to the agreement T-Mobile will not raise rates for at least three years and will increase 5G coverage to 97 percent of the U.S. population. ADI proprietary index data showed a net yield increment for high-grade versus high-yield bonds. High-yield edged out high-grade. Among high-yield bonds showing topmost price gains at appreciable volumes traded, Sprint Nextel Corp. (USD) 11.5% 11/15/2021 made analysts' 'Conviction Buy' lists. (See the chart for Sprint Nextel Corp. below.) Corey Mahoney

Key Gainers and Losers

Volume Leaders

+	Sprint Corp. 7.625% 3/1/2026	+ 0.9%
	Tenet Healthcare Corp. 0% 6/15/2023	+ 0.6%
-	Goodyear Tire & Rubber Co. 5% 5/31/2026	-0.1%

Sprint Nextel Corp. 7.875% 9/15/2023
Washington Prime Group LP 5.95% 8/15/2024

Industry Returns Tracker

Industry	Past Day	Past Week	Past Month	Past Quarter	YTD	Past Year
Agriculture, Forestry, Fishing	-0.02%	-0.02%	0.59%	5.94%	11.37%	10.67%
Mining	-0.07%	0.27%	-1.25%	-4.11%	5.75%	0.04%
Construction	-0.01%	0.29%	0.82%	3.23%	11.46%	9.20%
Manufacturing	0.01%	0.08%	0.18%	1.71%	9.47%	7.55%
Transportion, Communication, Electric/Gas	0.04%	0.66%	0.87%	3.36%	11.06%	9.28%
Wholesale	0.03%	0.30%	0.64%	2.45%	11.15%	7.51%
Retail	0.01%	0.26%	0.58%	2.79%	12.53%	9.69%
Finance, Insurance, Real-Estate	0.02%	0.34%	1.08%	3.07%	10.97%	9.36%
Services	0.00%	0.27%	0.50%	2.51%	10.07%	8.57%
Public Administration	0.22%	0.43%	1.45%	4.64%	11.02%	12.73%
Energy	-0.05%	0.13%	-1.08%	-3.16%	6.35%	0.95%

Total returns (non-annualized) by rating, market weighted.

New Issues	Forward Calendar
1. Mong Duong Finance Hldg BV (USD) 5.125% 5/7/2029 144A (07/25/2019): 678MM 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. DDM Holding AG: ¬100MM, Expected Q3 2019

Additional Commentary

NEW ISSUANCE WATCH: on 7/24/19 participants welcome a $1250MM new corporate-bond offering by JBS USA LLC. 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)
Hertz Corp. (5Y Sen USD XR14) Hovnanian Enterprises Inc. (5Y Sen USD MR14)	SuperValu Inc. (5Y Sen USD MR14) San Miguel Corp. (5Y Sen USD CR14)

Loans and Credit Market Overview

SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, notable secondary activity:

Nascar Holdings Inc., NGPL Pipeco LLC, Whatabrands LLC, Electricite de France

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 16 bp (basis points), as of 07/26/19
Net positive capital flows into high-yield ETFs & mutual funds

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.

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