High Yield Bond Research - June 13, 2019

Posted by Corey Mahoney on Jun 13, 2019 5:10:17 PM
INVESTMENT GRADE DEBT ROSE AGAINST JUNK BONDS in net prices linked to actual trades as a risk-off sentiment continues. Crude oil spiked following two tankers being attacked near the Strait of Hormuz threatening the global supply, delivery of July crude shot up more than 4 percent before settling up 2.09 percent. Director of research at GraniteShares stated, The nature of these events is that the outcomes are quite binary: either a major supply disruption event transpires or it does not.” The 10-year note lost 2.0 basis points. S&P +0.15%, DOW +0.15, NASDAQ +0.34%
unnamed - 2019-05-28T172139.160
THE NUMBER OF AMERICANS FILING UNEMPLOYMENT APPLICATIONS increased last week to a five-week high rising by 3,000 claims.  Despite the modest climb in jobless claims, the labor market remains robust and unemployment maintains its near historic 50-year lows.  Trade war flare-ups and the lack of skilled labor have hindered the economy causing anxiety and a slowdown for hiring in the retail, construction and manufacturing sectors.  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, Public Service Electric And Gas Company (USD) 5.7% 12/1/2036 made analysts' 'Conviction Buy' lists. (See the chart for ADI indexes above.) Corey Mahoney (cmahoney@advantagedata.com).
Key Gainers and Losers Volume Leaders
+   HCA Inc. 5.375% 2/1/2025 + 0.2%
  Whiting Petroleum Corp. 6.625% 1/15/2026 + 0.3%
-   Genworth Financial Inc. 7.625% 9/24/2021 -0.0%
Frontier Communications Corp.   11% 9/15/2025
Chesapeake Energy Corp.   8% 1/15/2025
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.13% 0.85% 1.72% 2.68% 7.58% 10.04%
Mining -0.45% -0.19% -2.51% -0.36% 6.46% 1.17%
Construction -0.02% 0.69% 1.12% 3.89% 8.90% 6.63%
Manufacturing -0.08% 0.60% 0.11% 1.95% 7.54% 5.74%
Transportion, Communication, Electric/Gas -0.13% 0.42% 1.21% 3.46% 8.75% 8.08%
Wholesale -0.09% 0.56% 0.84% 2.84% 9.13% 6.03%
Retail -0.05% 0.81% 0.61% 4.86% 11.17% 8.52%
Finance, Insurance, Real-Estate -0.02% 0.64% 0.77% 2.75% 8.61% 7.83%
Services -0.07% 0.74% 1.13% 3.02% 9.11% 7.98%
Public Administration 0.02% 1.16% 1.47% 2.65% 8.21% 13.49%
Energy -0.43% -0.25% -2.45% -0.35% 6.22% 0.86%
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-06-13T170856.971

New Issues Forward Calendar

1. Outfront Media Capital LLC (USD) 5% 8/15/2027 Reg S (06/13/2019): 650MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5%.

2. Harsco Corp. (USD) 5.75% 7/31/2027 Reg S (06/13/2019): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.75%.

1. Diamondback Energy Inc.: High-yield notes, Expected Q2 2019

2. Harsco Corp.: Unsecured Debt, Expected Q3 2019

Additional Commentary

NEW ISSUANCE WATCH: on 6/13/19 participants welcome a $500MM new corporate-bond offering by Harsco Corp. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 6/7/19, with a net outflow of $3.2B, year-to-date $6.6B 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)
Atmos Energy Corp. (5Y Sen USD MR14)

unnamed - 2019-06-05T084255.682

Loans and Credit Market Overview


Deals recently freed for secondary trading, 
notable secondary activity: 
  • Perforce Software Inc., Avantor Performance Materials Inc., United PF Holdings LLC
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 06/13/19
  • 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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