Market Summaries

High Yield Bond Research - October 2, 2019

Written by Corey Mahoney | Oct 2, 2019 9:21:24 PM
ADP REPORTS THE PRIVATE SECTOR ADDED 135,000 jobs in September down 22,000 jobs from August. Investors await the official employment report released on Friday. “The average monthly job growth for the past three months is 145,000, down from 214,000 for the same time period last year.” The 10-year note fell 3.6 basis points. S&P -1.68%, DOW -1.74, NASDAQ -1.47%.

 

TREASURY YIELDS DOWN SHARPLY after slipping 15 basis points from yesterday’s high following weak economic reports. U.S. will impose $7.5 billion of tariffs on aircrafts at 10 percent and agricultural goods at 25 percent. “If the U.S. decides to impose WTO-authorized countermeasures, it will be pushing the EU into a situation where we will have no other option than do the same.” ADI proprietary index data showed a net yield increment for high-grade versus high-yield bonds. High-grade edged out high-yield. Among high-grade bonds showing topmost price gains at appreciable volumes traded,  AT&T Inc. (USD) 5.25% 3/1/20376  made analysts' 'Conviction Buy' list (See the chart below for AT&T Inc. indices above.) Corey Mahoney
Key Gainers and Losers Volume Leaders
+   DaVita HealthCare Partners Inc. 5% 5/1/2025 + 0.9%
  Freeport-McMoRan Inc. 4.55% 11/14/2024 + 0.5%
-   E*TRADE Financial Corp. 5.3% PERP -2.0%
HCA Inc.   5% 3/15/2024
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 -0.04% 0.09% 0.89% 2.12% 14.35% 13.69%
Mining -0.34% -2.83% -0.54% -4.29% 4.04% -2.66%
Construction -0.06% -0.08% 0.46% 2.69% 13.17% 10.05%
Manufacturing -0.00% -0.14% 0.34% 1.43% 10.91% 7.42%
Transportion, Communication, Electric/Gas -0.02% -0.16% 0.31% 1.70% 12.96% 8.70%
Wholesale -0.10% -0.23% 0.42% 1.45% 11.75% 7.73%
Retail -0.04% -0.26% 0.69% 1.43% 14.14% 9.73%
Finance, Insurance, Real-Estate 0.02% -0.10% 0.52% 2.72% 13.11% 10.38%
Services -0.06% -0.15% 0.61% 2.34% 12.40% 9.18%
Public Administration 0.12% 0.22% -0.26% 3.04% 12.76% 16.04%
Energy -0.14% -2.02% -0.62% -2.99% 6.29% 0.07%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

1. Photo Hldg Merger Sub, Inc. (USD) 8.5% 10/1/2026 144A (10/01/2019): 785MM First Lien Notes, Price at Issuance 94.371, Yielding 9.62%.

2. Metinvest BV (USD) 7.75% 10/17/2029 144A (10/01/2019): 500MM Senior Unsecured Notes, Price at Issuance 98.629, Yielding 7.95%.

1. Presidio Inc.: $1.775B high yield bonds, Expected 4th Quarter 2019

2. Alpha Auto Group: $225MM notes, Expected 4th Quarter 2019

Additional Commentary

NEW ISSUANCE WATCH: on 10/01/19 participants welcome a $500M new corporate-bond offering by
Metinvest BV. The most recent data showed a money flowed out of highyoutflow ETF/mutual funds for the week ended 9/27/2019, with a net outflow of $258 million.
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)		 SuperValu Inc. (5Y Sen USD XR14)
San Miguel Corp. (5Y Sen USD CR14)

Loans and Credit Market Overview

SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, notable secondary activity: 
  • Raytheon Co., Shearer's Foods Inc., Triumph Group Inc., Seagate Technology, B&G Foods 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 30 bp (basis points), as of 10/02/19
  • Net positive capital flows into high-yield ETFs & mutual funds 

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