BOSTON FED RESERVE CHAIRMAN ERIC ROSENGREN stated he sees “no clarion call” to increase interest rates any time soon emphasizing “the Fed can afford to wait and see.” Unemployment is hovering at 50-year lows, In April the jobless rate was 3.6 percent. Treasury yields ticked higher after a report the US eased trade restrictions on Chinese telecom giant Huawei Technologies. The 10-year note gained 1.2 basis points. S&P +0.84%, DOW +0.72%, NASDAQ +1.05%.
U.S. EXISTING HOME SALES continued to soften in April despite a
sound economy and falling mortgage rates. The housing
market “underperforming in relation to economic performance, with job creation and [lower] mortgage rates”. The
privatization of mortgage titans Freddie Mac and Fannie Mae could take upwards of four to five years and an estimated
$75 billion apiece. Chief executive Donald Layton of Freddie Mac simply stated
“It is not clear how this is going to work. 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,
Range Resources Corp. (USD) 4.875% 5/15/2025 made analysts' 'Conviction Buy' lists. (See the chart for
Range Resources Corp. Bonds below.)
Corey Mahoney (
cmahoney@advantagedata.com).
| Key Gainers and Losers |
Volume Leaders |
| + |
Goodyear Tire & Rubber Co. 4.875% 3/15/2027 |
+ 1.0% |
| |
Sprint Capital Corp. 6.875% 11/15/2028 |
+ 0.3% |
| - |
Chemours Co. LLC 5.375% 5/15/2027 |
-0.3% |
|
Sprint Nextel Corp. 7.875% 9/15/2023
Sprint Capital Corp. 6.875% 11/15/2028
|
| Industry Returns Tracker |
| Industry |
Past Day |
Past Week |
Past Month |
Past Quarter |
YTD |
Past Year |
| Agriculture, Forestry, Fishing |
0.08% |
0.19% |
-1.25% |
2.27% |
5.56% |
7.25% |
| Mining |
-0.26% |
0.03% |
-1.50% |
0.74% |
7.74% |
1.98% |
| Construction |
-0.13% |
0.03% |
-0.09% |
3.59% |
8.05% |
5.90% |
| Manufacturing |
-0.13% |
0.04% |
-0.34% |
2.46% |
7.41% |
6.41% |
| Transportion, Communication, Electric/Gas |
-0.15% |
0.20% |
-0.32% |
3.11% |
7.58% |
6.85% |
| Wholesale |
-0.12% |
0.06% |
0.07% |
2.22% |
7.82% |
5.52% |
| Retail |
-0.25% |
-0.12% |
0.25% |
3.38% |
10.03% |
7.34% |
| Finance, Insurance, Real-Estate |
-0.12% |
-0.02% |
-0.16% |
2.38% |
7.58% |
6.88% |
| Services |
-0.12% |
0.17% |
0.07% |
2.44% |
7.87% |
7.59% |
| Public Administration |
-0.09% |
0.12% |
0.74% |
3.09% |
6.90% |
13.22% |
| Energy |
-0.26% |
-0.03% |
-1.48% |
0.99% |
7.63% |
1.72% |
| |
| Total returns (non-annualized) by rating, market weighted. |
|
| New Issues |
Forward Calendar |
|
1. Berry Global Inc. (USD) 5.625% 7/15/2027 Reg S (05/20/2019):500MM Second Lien Notes, Price at Issuance 100, Yielding 5.63%.
2. Gran Tierra Energy Inc. (USD) 7.75% 5/23/2027 Reg S (05/21/2019): 300MM Senior Unsecured Notes, Price at Issuance 98.543, Yielding 8%.
|
1. Diamondback Energy Inc.: High-yield notes, Expected Q2 2019
2. Harsco Corp.: Unsecured Debt, Expected Q3 2019
|
Additional Commentary
NEW ISSUANCE WATCH: on 5/21/19 participants welcome a $300MM new corporate-bond offering by Gran Tierra Energy Inc.. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 5/17/19, with a net outflow of $2.6B, year-to-date $11.0B 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)
San Miguel Corp. (5Y Sen USD CR14) |
Loans and Credit Market Overview
SYNDICATED LOANS HIGHLIGHTS:
Deals recently freed for secondary trading, notable secondary activity:
- Southern California Edison Co., Horizon Pharma Inc., Berry Plastics Corp.
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 05/21/19
- Net positive capital flows into high-yield ETFs & mutual funds
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