High Yield Bond Research - July 5, 2019

Posted by Andrew Robartes on Jul 5, 2019 5:10:00 PM
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THE U.S. ADDED 224,000 JOBS in June according the Department of Labor, surpassing the expected gain of 170,000. News of the report has eased economic worry and will likely affect the Federal Reserve’s decision to lower interest rates this month. As of now, some analysts predict a cut will happen later this year while others maintain there will be a 25-basis point cut at the end of the month. S&P -0.18%, DOW -0.16%, NASDAQ -0.10%
U.S. STOCKS FELL THIS MORNING amidst the news of the above-expected job growth in June. The markets, however, recovered most of their losses this afternoon. 10-Year Treasury yields rose 9.2 basis points after settling below 2% on Wednesday. ADI proprietary index data showed a net yield increment for high-yield versus high-grade bonds. High-yield edged out high-grade. Among high-yield bonds showing topmost price gains at appreciable volumes traded, Frontier Communications Corp. (USD) 8.5% 4/15/2020 made analysts' 'Conviction Buy' lists. (See the chart for Frontier Communications Corp. (USD) 8.5% 4/15/2020 below) Andrew Robartes (arobartes@advantagedata.com).
Key Gainers and Losers Volume Leaders
+   Petrobras Global Finance BV 7.375% 1/17/2027 + 0.4%
  Hecla Mining Co. 6.875% 5/1/2021 + 1.3%
-   Williams Cos Inc. 5.75% 6/24/2044 -1.5%
  General Motors Co. 6.25% 10/2/2043 -0.3%
Goldman Sachs Group Inc.   5% PERP
Teva Pharmaceuticals Fin BV   6.75% 3/1/2028
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.16% 0.59% 5.32% 6.87% 13.92% 16.41%
Mining -0.01% -0.11% 0.97% -1.14% 7.49% 2.41%
Construction -0.03% 0.08% 2.61% 3.59% 10.60% 8.64%
Manufacturing 0.03% 0.28% 2.57% 2.10% 9.09% 7.55%
Transportion, Communication, Electric/Gas 0.01% 0.32% 2.56% 3.61% 10.20% 9.72%
Wholesale 0.01% 0.16% 2.51% 3.31% 11.21% 8.27%
Retail -0.02% 0.43% 2.74% 4.10% 12.58% 9.85%
Finance, Insurance, Real-Estate 0.03% 0.50% 2.44% 2.85% 9.89% 9.63%
Services -0.02% 0.12% 2.28% 2.56% 9.76% 9.26%
Public Administration 0.42% 0.63% 2.92% 4.11% 10.27% 14.46%
Energy -0.03% -0.09% 0.94% -0.58% 7.51% 2.33%
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-07-09T110739.668

New Issues Forward Calendar

(None Current 07/05/2019)


1. Atlantica Tender Drilling Ltd: $140MM, Expected Q3 2019

2. General Electric Distributed Power: $600M high-yield bonds, Expected Q2 2019

Additional Commentary

NEW ISSUANCE WATCH: on 7/2/19 participants welcome a $243MM new corporate-bond offering by AAG FH LP/AAG FH Finco 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)
Rite Aid Corp. (5Y Sen USD MR14)
Weatherford International LTD (5Y Sen USD MR14)
Road King Infrastructure LTD (5Y Sen USD CR14)
SuperValu Inc. (5Y Sen USD MR14)

unnamed - 2019-06-27T171147.709

Loans and Credit Market Overview


Deals recently freed for secondary trading, 
notable secondary activity: 
  • Goshawk Aviation Ltd, Valence Surface Technologies, Moneygram Intl. 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 10 bp (basis points), as of 07/05/19
  • 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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