High Yield Bond Research - June 19, 2019

Posted by Corey Mahoney on Jun 19, 2019 5:07:32 PM
THE FEDERAL RESERVE HOLDS THE CURRENT INTEREST RATES but suggests a rate cut on the horizon if the economy slows down. The Federal Reserve Chairman, Jerome Powell indicated they “will act as appropriate to sustain the expansion” going on 10-years and refrained from mentioning the word“patient”. Treasury yields dipped following the Feds announcement, the 10-year note fell 2.1 basis points. S&P +0.41%, DOW +0.29, NASDAQ +0.40%.
unnamed - 2019-05-28T172139.160
US CONSUMER DEBT EXCEEDS LEVELS SEEN DURING THE FINANCIAL CRISIS OF 2008. Analysts estimate in the first quarter of 2019 the total consumer debt hit $14 trillion. Student debt has ballooned over the past ten-years surpassing $1.486 trillion, more than doubling since 2008. The Fed’s dot plot revealed a shift in the Open Market Committee’s mindset as nine members expect the rate to near 2.1 percent by the end of 2020, contrary to 2.6 percent during the last update. “It appears that about half of the committee is starting to panic about the risks posed by trade tensions, while the other half wants to remain ‘patient’. 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, Johnson Controls Inc. (USD) 5.25% 12/1/2041 made analysts' 'Conviction Buy' lists. (See the chart for ADI Indexes above.) Corey Mahoney (cmahoney@advantagedata.com).
Key Gainers and Losers Volume Leaders
+   Deutsche Bank AG VAR% 12/1/2032 + 1.6%
  Western Digital Corp. 4.75% 2/15/2026 + 1.1%
-   SBA Communications Corp. 4.875% 9/1/2024 -0.3%
United States STL Corp. New   6.25% 3/15/2026
Vale Overseas LTD   6.25% 8/10/2026
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.66% 2.52% 4.45% 4.54% 9.91% 12.03%
Mining 0.32% -1.22% -2.93% -0.93% 5.72% 0.37%
Construction 0.14% 0.23% 1.45% 3.91% 9.21% 6.96%
Manufacturing 0.23% 0.17% 0.73% 2.03% 8.13% 6.30%
Transportion, Communication, Electric/Gas 0.23% 0.28% 1.61% 3.21% 8.85% 7.69%
Wholesale 0.15% 0.24% 1.31% 3.17% 10.03% 6.47%
Retail 0.13% 0.12% 1.26% 4.32% 11.15% 8.24%
Finance, Insurance, Real-Estate 0.18% 0.27% 1.17% 2.57% 8.69% 7.90%
Services 0.16% 0.20% 1.41% 2.96% 9.26% 8.11%
Public Administration -0.08% 0.33% 1.46% 2.75% 8.54% 13.97%
Energy 0.31% -1.05% -2.72% -0.74% 5.67% 0.23%
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-06-19T170552.192

New Issues Forward Calendar

1. Sirius XM Radio Inc. (USD) 4.625% 7/15/2024 144A (06/18/2019):1500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.63%.

1. Obsidian Energy LTD: $100MM, Expected Week of 6/17

2. Petroleum Geo-Services: $150MM, Expected Week of 6/17

Additional Commentary

NEW ISSUANCE WATCH: on 6/19/19 participants welcome a $1120MM new corporate-bond offering by Nexstar Escrow 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)
Rite Aid Corp. (5Y Sen USD XR14)
Weatherford International LTD (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: 
  • Hilton Worldwide Finance LLC, US Renal Care Inc., Perforce Software Inc.
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 18 bp (basis points), as of 06/19/19
  • Net positive capital flows into high-yield ETFs & mutual funds 

Copyright 2019 Advantage Data Inc. All Rights Reserved. http://www.advantagedata.com

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.

Topics: Investment Grade, Loans, Analytics, bonds, junk bonds, bond market, market analytics, New Issues, News, Syndicated Bonds, syndicated, research, market update

Are you using AdvantageData?

AdvantageData is your fixed income solution for pricing, analytics, reports, and insight on approximately:

  • 500,000+ U.S. and international corporate bonds
  • Over 6,200+ CDS reference entities
  • Over 22,000+ syndicated loans
  • Over 100 equity markets worldwide
  • One platform 16 products and services from debt to CDS to loans to mid-market
  • Used by top buy and sell-side firms worldwide

Subscribe to Email Updates

Recent Posts