High Yield Bond Research - March 8, 2019

Written by Corey Mahoney | Mar 8, 2019 10:13:02 PM

EQUITIES MARK THEIR FIFTH CONSECUTIVE DAY OF DECLINES as investors react to a weak jobs report igniting concerns of a cooling economy. Jonathan Hill, from BMO Capital remained positive, the “Treasury yield moves speak to willingness to look through this”. Despite the poor report, treasury yields remained stable, the 10-year U.S. Treasury note dipped 1.2 basis points and the 30-year note sank 1.4 basis points. S&P -0.81%, Dow -0.78%, NASDAQ -1.13%

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U.S. PAYROLLS ADD A TRIVIAL 20,000 JOBS in February, recording the weakest report since September 2017 well below economists’ estimates of 180,000 new jobs and contrary to ADP’s report of 183,000 jobs. Construction took an acute hit in February losing 31,000 jobs, analysts account climate patterns for the decline. Meanwhile, unemployment dipped to 3.8 percent in the same period from 4 percent in the previous month. Since emerging from the recession in 2010 nearly 21 million jobs have been created, producing the tightest job market in decades. Crude futures initially sank 3 percentdespite oil imports rising 20 percent in China, delivery of April crude recovered settling -0.94% lower. 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, Caterpillar Inc (USD) 5.3% 9/15/2035 made analysts' 'Conviction Buy' lists. (See the chart for ADI indexes above) Corey Mahoney (cmahoney@advantagedata.com).

Key Gainers and Losers

Volume Leaders

+	Staples Inc. 8.5% 9/15/2025 144A	+ 0.7%
	Windstream Services LLC 8.625% 10/31/2025 144A	+ 0.5%
-	XPO Logistics Inc. 6.75% 8/15/2024 144A	-0.3%

XPO Logistics Inc. 6.75% 8/15/2024 144A
Avantor Performance Materials Inc. 9% 10/1/2025 144A

Industry Returns Tracker

Industry	Past Day	Past Week	Past Month	Past Quarter	YTD	Past Year
Agriculture, Forestry, Fishing	-0.10%	0.40%	1.62%	5.34%	4.53%	3.19%
Mining	-0.23%	-0.80%	0.06%	2.53%	6.14%	1.84%
Construction	-0.06%	-0.23%	0.77%	4.16%	4.61%	2.49%
Manufacturing	-0.14%	-0.10%	1.12%	3.85%	5.12%	4.55%
Transportion, Communication, Electric/Gas	-0.09%	-0.08%	1.38%	3.31%	4.61%	4.22%
Wholesale	-0.10%	-0.15%	0.97%	3.82%	5.17%	3.48%
Retail	-0.17%	-0.24%	0.96%	3.62%	5.77%	3.47%
Finance, Insurance, Real-Estate	-0.07%	-0.07%	0.89%	4.25%	5.18%	4.73%
Services	-0.13%	-0.17%	1.12%	4.34%	5.93%	5.37%
Public Administration	0.03%	0.21%	0.91%	2.74%	2.00%	22.20%
Energy	-0.20%	-0.65%	0.11%	2.65%	5.75%	2.24%

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

New Issues	Forward Calendar
1. Archrock Partners LP (USD) 6.875% 4/1/2027 144A (03/07/2019):500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.88%.	1. Twinset Spa: ¬170M 5 year senior secured floating-rate notes, Expected Q1 2019 2. Starwood Property Trust Inc: $300M senior notes, Expected Q1 2019

Additional Commentary

NEW ISSUANCE WATCH: on 3/5/19 participants welcome a $1100MM new corporate-bond offering by
Scientific Games Intl. Inc. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 2/22/19, with a net inflow of $0.69B, year-to-date $9.7B flowed into high-yield.

Top Widening Credit Default Swaps (CDS)	Top Narrowing Credit Default Swaps (CDS)
Weatherford International LTD (5Y Sen USD XR14) Hertz Corp. (5Y Sen USD CR14)	Cable & Wireless Communication (5Y Sen USD CR14) SuperValu Inc. (5Y Sen USD MR14)

Loans and Credit Market Overview

SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, notable secondary activity:

Wynn Resorts LTD., Xylem Inc., Amer Sports Corp., Orchid Orthopedic Solutions, Neustar 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 16 bp (basis points), as of 03/08/19
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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