U.S. STOCKS RECOVERED EARLY LOSSES on Friday as positive economic data weighs against trade concerns. News that China is hesitant to resume trade talks with the U.S. reinforced investors' concerns that tensions will persist. However, news that consumer sentiment is at a 15-year high bolstered stocks and stabilized U.S. treasury yields, with the 10-Year Note at 2.39%. S&P -0.58%, Dow -0.38%, NASDAQ -1.04%.
IN THE CORPORATE BOND MARKET, Dow Chemical Co., a wholly owned subsidiary of Dow Inc.,
priced $2 billion in senior unsecured notes. The commodity chemical company
intends to use the proceeds to repay indebtedness and redeem existing notes. President of Dow, Howard Ungerleider said “The current interest rate environment provides us with a
window to opportunistically manage and extend our debt maturity profile”. The bonds were given a
rating of BBB by Standard and Poor’s.
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,
Charles Schwab Corp. (USD) 3.2% 1/25/2028 made analysts' 'Conviction Buy' lists. (See the chart for
ADI indexes above.)
Andrew Robartes (
arobartes@advantagedata.com).
| Key Gainers and Losers |
Volume Leaders |
| + |
Sprint Corp. 7.125% 6/15/2024 |
+ 0.4% |
| |
Netflix Inc. 5.875% 2/15/2025 |
+ 1.3% |
| - |
Western Digital Corp. 4.75% 2/15/2026 |
-1.8% |
|
Sprint Capital Corp. 8.75% 3/15/2032
Western Digital Corp. 4.75% 2/15/2026
|
| Industry Returns Tracker |
| Industry |
Past Day |
Past Week |
Past Month |
Past Quarter |
YTD |
Past Year |
| Agriculture, Forestry, Fishing |
0.24% |
-0.30% |
-1.30% |
2.36% |
5.49% |
7.35% |
| Mining |
0.29% |
-0.31% |
-1.00% |
1.87% |
8.52% |
3.50% |
| Construction |
0.04% |
-0.17% |
-0.10% |
3.80% |
8.09% |
5.72% |
| Manufacturing |
0.13% |
-0.33% |
-0.43% |
2.29% |
6.98% |
5.95% |
| Transportion, Communication, Electric/Gas |
0.16% |
-0.16% |
-0.24% |
3.18% |
7.27% |
7.26% |
| Wholesale |
0.12% |
-0.09% |
0.24% |
2.68% |
7.96% |
5.53% |
| Retail |
0.21% |
-0.29% |
0.72% |
3.77% |
10.07% |
7.68% |
| Finance, Insurance, Real-Estate |
0.06% |
-0.09% |
0.14% |
2.96% |
7.46% |
6.94% |
| Services |
0.17% |
-0.11% |
-0.18% |
2.64% |
7.86% |
7.69% |
| Public Administration |
0.12% |
0.11% |
1.10% |
3.09% |
6.82% |
13.10% |
| Energy |
0.29% |
-0.46% |
-1.17% |
1.68% |
8.16% |
2.64% |
| |
| Total returns (non-annualized) by rating, market weighted. |
|
| New Issues |
Forward Calendar |
|
1. Transocean Sentry LTD (USD) 5.375% 5/15/2023 Reg S (05/16/2019): 525MM First Lien Notes, Price at Issuance 99.5, Yielding 5.52%.
2. American Airlines Group Inc. (USD) 5% 6/1/2022 Reg S (05/17/2019): 750MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5%.
|
1. Harsco Corp.: Unsecured Debt, Expected Q3 2019
|
Additional Commentary
NEW ISSUANCE WATCH: on 5/17/19 participants welcome a $750MM new corporate-bond offering by American Airlines Group Inc. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 5/10/19, with a net outflow of $212MM, year-to-date $13.6B flowed into high-yield.
| Top Widening Credit Default Swaps (CDS) |
Top Narrowing Credit Default Swaps (CDS) |
Rite Aid Corp. (5Y Sen USD XR14)
Hertz Corp. (5Y Sen USD CR14) |
Road King Infrastructure LTD (5Y Sen USD MR14)
SuperValu Inc. (5Y Sen USD MR14) |
Loans and Credit Market Overview
SYNDICATED LOANS HIGHLIGHTS:
Deals recently freed for secondary trading, notable secondary activity:
- Horizon Pharma Inc., PCI GAMING AUTHORITY, Medallion Midland Acquisition
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 14 bp (basis points), as of 05/17/19
- Net positive capital flows into high-yield ETFs & mutual funds
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