STOCKS DECLINED AGAIN ON THURSDAY as a week of uncertainty over U.S.-China trade relations continues. The world's two largest economies have yet to strike a trade deal, but proceedings have officially begun to increase tariffs on Chinese imports from 10% to 25%. In the midst, the Dow Jones dropped 139 points. 10-Year U.S. Treasury Notes fell 3 basis points. S&P -0.30%, Dow -0.54% , NASDAQ -0.41%. 

IN THE CORPORATE BOND MARKET, IBM Corp. recently sold $20B worth of senior unsecured notesto fund the purchase of software company Red Hat Inc. This is the largest issuance of corporate debt this year, surpassing Bristol-Myers Squibb's $19B deal from just a day earlier. According to Mike Collins, a portfolio manager at PGIM Fixed Income, the demand for corporate debt indicates that "the fundamentals of the global economy look decent, especially the U.S. economy, and companies are being opportunistic and issueing while they can". IBM has pledged to keep Red Hat independently run after the acquistion.  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, Time Warner Inc. (USD) 7.7% 5/1/2032 made analysts' 'Conviction Buy' lists. (See the chart for ADI Inedexes above.) Andrew Robartes (arobartes@advantagedata.com).

 

Key Gainers and Losers	Volume Leaders
+   Wachovia Capital Trust III FLT% 3/15/2042 + 0.2%   Avon Products Inc. 5% 3/15/2023 + 1.0% -   CenturyLink Inc. 7.5% 4/1/2024 -0.8%	Mississippi Power Co.   3.95% 3/30/2028 US Steel Corp.   6.875% 8/15/2025

Industry Returns Tracker

Industry Past Day Past Week Past Month Past Quarter YTD Past Year Agriculture, Forestry, Fishing -0.03% 0.33% 1.15% 5.18% 8.02% 9.92% Mining 0.03% -0.65% 0.33% 2.75% 8.80% 3.99% Construction -0.09% -0.54% 0.79% 4.56% 8.31% 5.70% Manufacturing -0.07% -0.33% 0.64% 3.51% 7.58% 6.67% Transportion, Communication, Electric/Gas -0.08% -0.28% 0.86% 4.50% 7.93% 7.20% Wholesale -0.00% -0.15% 0.92% 3.45% 8.01% 5.44% Retail -0.10% -0.17% 2.06% 4.68% 10.11% 8.10% Finance, Insurance, Real-Estate -0.05% -0.21% 0.69% 3.52% 7.85% 6.91% Services -0.07% -0.27% 0.46% 3.18% 7.61% 7.45% Public Administration -0.17% 0.56% 0.65% 3.76% 6.68% 12.07% Energy 0.02% -0.67% 0.63% 2.86% 8.68% 3.55%   Total returns (non-annualized) by rating, market weighted.

New Issues	Forward Calendar
1. Eagle Holding Co II LLC (USD) 7.75% 5/15/2022 144A (05/08/2019): 900MM Unsecured Notes, Price at Issuance 99, Yielding 8.13%. 2. SpringLeaf Finance Corp. (USD) 6.625% 1/15/2028 (05/08/2019):800MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.63%.	1. General Electric Distributed Power: $600M high-yield bonds, Expected Q2 2019 2. E.W. Scripps: $1.85B term loans and unsecured debt, Expected Q2 2019

NEW ISSUANCE WATCH: on 5/09/19 participants welcome a $825MM new corporate-bond offering by Virgin Media Secured Finance PLC. The most recent data showed money flowed into high-yield ETFs/mutual funds for the week ended 5/03/19, with a net inflow of $21.3MM, year-to-date $13.9B flowed into high-yield.

 

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

Loans and Credit Market Overview

SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, notable secondary activity: 

• Rikshem AB, Broadcom LTD, Verifone Inc., Twin River Management Group 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 12 bp (basis points), as of 05/09/19
• Net positive capital flows into high-yield ETFs & mutual funds 

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