High Yield Bond Research - October 25, 2019

Posted by Pierre Robert on Oct 25, 2019 5:06:24 PM
US STOCKS WERE UP TODAY. Sovereign bonds were also mixed as well. Brexit continues to be a concern. 10 year Treasury note advanced  3.3 bpsS&P +.041%, DOW +0.57%, NASDAQ +0.70%.
IMPEACHMENT SAGA CONTINUES. TRUMP CONTEMPLATING SELLING WASHINGTON HOTELS AMID SELF DEALING ISSUE. More testimony suggesting self dealing in Ukraine.  ADI proprietary index data showed a net yield increment for high-grade versus high-yield bondsHigh-grade edged out high-yield. Among high-grade bonds showing topmost price gains at appreciable volumes traded, Denbury Resources Inc. (USD) 6.375% 8/15/2021 made analysts' 'Conviction Buy' list. (See the chart below for Denbury Resources Inc. above) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Charter Communications Operating LLC 5.05% 3/30/2029 + 0.5%
  US Steel Corp. 6.875% 8/15/2025 + 1.5%
-   Pacific Gas & Electric Co. 6.05% 3/1/2034 -4.8%
  Intelsat Jackson Hldg SA 5.5% 8/1/2023 (1) -0.1%
Pacific Gas & Electric Co.   6.05% 3/1/2034
Aircastle LTD   5.125% 3/15/2021
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.03% 0.24% 1.49% 3.32% 16.83% 16.23%
Mining 0.14% -0.35% -3.92% -3.90% 4.40% -0.88%
Construction 0.10% 0.40% 1.33% 3.69% 15.21% 14.08%
Manufacturing 0.03% 0.29% 0.43% 2.18% 11.93% 9.89%
Transportion, Communication, Electric/Gas 0.02% 0.12% 0.43% 1.88% 13.62% 10.78%
Wholesale -0.03% -0.02% -0.39% 0.70% 11.84% 8.99%
Retail 0.10% 0.09% 0.54% 2.19% 15.10% 13.05%
Finance, Insurance, Real-Estate 0.07% 0.37% 0.56% 2.59% 13.48% 11.62%
Services 0.08% 0.34% 0.60% 2.62% 12.97% 11.21%
Public Administration -0.07% 0.47% 1.23% 2.82% 13.87% 16.23%
Energy 0.09% -0.37% -3.48% -3.26% 5.31% 0.27%
Total returns (non-annualized) by rating, market weighted.
New Issues Forward Calendar

1. Foxtrot Escrow Issuer LLC (USD) 12.25% 11/15/2026 Reg S (10/24/2019): 775MM Secured Notes, Price at Issuance 98.279, Yielding 12.62%.

2. Foxtrot Escrow Issuer LLC (USD) 12.25% 11/15/2026 144A (10/24/2019): 775MM Secured Notes, Price at Issuance 98.279, Yielding 12.62%.

1. Qmax Financial Holdings Inc.: $225MM, Expected 4th Quarter 2019

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

Additional Commentary

NEW ISSUANCE WATCH: on 10/22/19 participants welcome a $1B new corporate-bond offering by Netflix Inc. 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)
Rite Aid Corp. (5Y Sen USD MR14)
Weatherford International LTD (5Y Sen USD XR14)
Ghana, Republic of (5Y Sen USD CR14)
Cable & Wireless Communication (5Y Sen USD CR14)

unnamed - 2019-09-09T165353.966

Loans and Credit Market Overview


Deals recently freed for secondary trading, 
notable secondary activity: 
  • McDermott International Inc., Live Nation Entertainment Inc., Berry Plastics Corp. 

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 27 bp (basis points), as of 10/25/19
  • Net positive capital flows into high-yield ETFs & mutual funds 

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Topics: Investment Grade, Loans, Analytics, bonds, junk bonds, bond market, market analytics, New Issues, News, Syndicated Bonds, syndicated, research, market update

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