RISK-OFF SENTIMENT PREVAILED as investment grade debt rose against junk bonds in net prices linked to actual trades.  Jobless claims fell to a seasonally adjusted 211,000 claims surpassing expectations; managers continue to struggle with employee retention and sourcing skilled labor. In other economic news, new home sales declined across the country in all regions except the Northeast sinking 6.9 percent. The 10-year note plunged 7 basis points settling near 18-month lows. S&P -1.19%, DOW -1.11%,NASDAQ -1.58%.

EQUITIES TOOK A NOSE DIVE ON THURSDAY as Wall Street fears the trade dispute with China is becoming a “full-blown trade war”.  Crude oil tumbled 5.86 percent marking the largest single-session drop of the year, crossing below the 200-day moving average.  The markets are grasping the reality surrounding the trade spat, “The uncertainty around trade negotiations is adversely impacting financial markets of all sorts including equities and certainly oil futures”. 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, Microsoft Corp. (USD) 4.5% 2/6/2057 made analysts' 'Conviction Buy' lists. (See the chart for ADI indexes above.) Corey Mahoney (cmahoney@advantagedata.com).

 

Key Gainers and Losers	Volume Leaders
+   Sprint Corp. 7.625% 3/1/2026 + 0.3%   Petrobras Global Finance BV 8.75% 5/23/2026 + 0.3% -   Lear Corp. 5.25% 1/15/2025 -0.3%	Enbridge Inc.   VAR% 3/1/2089 General Motors Co.   5.2% 4/1/2045

Industry Returns Tracker

Industry Past Day Past Week Past Month Past Quarter YTD Past Year Agriculture, Forestry, Fishing -0.28% 0.35% -1.16% 2.28% 5.59% 7.34% Mining -0.22% -0.28% -1.73% 0.53% 7.75% 1.81% Construction -0.00% 0.05% 0.12% 3.32% 8.15% 6.47% Manufacturing 0.00% 0.10% -0.31% 2.17% 7.26% 6.09% Transportion, Communication, Electric/Gas 0.02% 0.15% -0.03% 3.21% 7.68% 7.26% Wholesale -0.10% -0.02% 0.13% 2.27% 7.38% 5.34% Retail 0.01% 0.00% 0.46% 3.42% 9.20% 7.43% Finance, Insurance, Real-Estate -0.00% 0.11% 0.15% 2.63% 7.88% 7.04% Services -0.00% 0.32% 0.35% 2.38% 7.90% 7.84% Public Administration 0.43% 0.43% 1.16% 3.30% 7.15% 13.51% Energy -0.14% -0.17% -1.52% 0.96% 7.72% 1.60%   Total returns (non-annualized) by rating, market weighted.

New Issues	Forward Calendar
1. Eldorado Gold Corp. (USD) 9.5% 6/1/2024 144A (05/22/2019):300MM Second Lien Notes, Price at Issuance 98, Yielding 10.01%. 2. IHO Verwaltungs GmbH (USD) 6.375% 5/15/2029 144A (05/22/2019): 400MM Secured Notes, Price at Issuance 100, Yielding 6.38%.	1. Calpine Corp.: $1.4B bonds, Expected Q2 2019 2. E.W. Scripps: $1.85B term loans and unsecured debt, Expected Q2 2019

NEW ISSUANCE WATCH: on 5/23/19 participants welcome a $400MM new corporate-bond offering by Builders FirstSource 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)
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: 

• Service Corp. Intl., Lucid Energy Group LLC, Southern California Edison Co.

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 05/23/19
• 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.