High Yield Bond Research - July 30, 2019

Posted by Corey Mahoney on Aug 1, 2019 3:33:23 PM
CONSUMER CONFIDENCE SURGES TO 135.7 NEARING AN 18-YEAR HIGH set back in October of 137.9. Despite the strong confidence among consumers the Fed is expected to cut rates fearing damage done by the trade dispute is worse than anticipated. “Consumers are once again optimistic about current and prospective business and labor market conditions.” Gold held steady as a safe-haven asset for investors fleeing volatility. The 10-year note lost 0.5 basis points.  S&P -0.28%, DOW -0.09, NASDAQ -0.24%.
EQUITY MARKETS WAVER as traders wait for clarification from the Fed on a decision if interest rates will be cut. Crude oil rallied 2.27 percent on Tuesday as bulls remain optimistic the Federal Reserve will lower rates causing a boost in demand resulting in higher prices.  “Crude oil moved higher today partly due to anticipation of another meaningful inventory draw this week along with tensions that remain escalated in the Strait of Hormuz.” 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, T-Mobile USA Inc. (USD) 4.75% 2/1/2028 made analysts' 'Conviction Buy' lists. (See the chart for T-Mobile bonds below.) Corey Mahoney
Key Gainers and Losers Volume Leaders
+   Antero Resources Corp. 5.625% 6/1/2023 + 0.0%
  Teva Pharmaceutical Industries LTD 2.8% 7/21/2023 + 0.1%
-   Sprint Nextel Corp. 7.875% 9/15/2023 -0.3%
Sprint Nextel Corp.   7.875% 9/15/2023
The Escrow Corp. III   4.625% 7/15/2024
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.17% -0.30% -0.02% 5.47% 11.86% 12.21%
Mining -0.27% -0.29% -1.61% -3.93% 5.92% -0.02%
Construction -0.02% 0.23% 1.05% 3.09% 11.40% 9.24%
Manufacturing -0.01% 0.25% 0.26% 1.72% 9.66% 7.63%
Transportion, Communication, Electric/Gas -0.08% 0.41% 0.77% 3.19% 11.31% 9.16%
Wholesale 0.06% 0.24% 0.66% 2.73% 11.13% 7.54%
Retail -0.04% 0.28% 0.28% 2.01% 12.64% 8.85%
Finance, Insurance, Real-Estate 0.04% 0.34% 1.10% 2.86% 10.69% 9.05%
Services -0.04% 0.25% 0.74% 2.58% 10.53% 8.77%
Public Administration -0.18% 0.83% 1.14% 4.64% 11.10% 12.73%
Energy -0.22% -0.26% -1.47% -3.07% 6.37% 0.83%
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-08-01T153115.223

New Issues Forward Calendar

1. Select Medical Corp. (USD) 6.25% 8/15/2026 144A (07/29/2019):550MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.25%.

2. Walnut Bidco PLC (EUR) 6.75% 8/1/2024 Reg S (07/29/2019):475MM Secured Notes, Price at Issuance 100, Yielding 6.75%.

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

2. Diamondback Energy Inc.: High-yield notes, Expected Q3 2019

Additional Commentary

NEW ISSUANCE WATCH: on 7/30/19 participants welcome a $800MM new corporate-bond offering by
Ardagh Packaging Finance PLC. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 7/26/19, with a net inflow of $1.3B, Seven week total $9.0B 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)

unnamed - 2019-08-01T153117.188

Loans and Credit Market Overview


Deals recently freed for secondary trading, 
notable secondary activity: 
  • PLZ Aeroscience Corp., AIR Comm Corp. LLC, Nascar Holdings Inc., NGPL Pipeco LLC
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 07/30/19
  • 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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