High Yield Bond Research - September 12, 2019

Posted by Corey Mahoney on Sep 12, 2019 5:14:03 PM
JOBLESS CLAIMS PLUMMET TO 5-MONTH LOWS suggesting the labor market remains strong despite the deteriorating job growth. Claims fell by 15,000 reporting a seasonally adjusted total of 204,000 applications. The 10-year note rose 3.9 basis points. S&P +0.50%, DOW +0.39, NASDAQ +0.58%.
INFLATION EDGED HIGHER CLIMBING toward the Fed’s target rate of 2 percent reflecting a substantial drop in gasoline prices. Analysts expect the Federal Reserve to cut rates later this month. “The market has been hyper-sensitive to any issues on trade and if we get any whiff of a hint that there may be some progress, that’s viewed positively.” ADI proprietary index data showed a net yield increment for high-grade versus high-yield bondsHigh-yield edged out high-grade. Among high-yield bonds showing topmost price gains at appreciable volumes traded,  Noble Holding Intl. LTD (USD) 5.95% 4/1/2025 made analysts' 'Conviction Buy' list (See the chart below for Noble Holding Intl. LTD  bonds below) Corey Mahoney
Key Gainers and Losers Volume Leaders
+   Teva Pharmaceutical Industries LTD 2.2% 7/21/2021 + 0.6%
  AK Steel Holding Corp. 7% 3/15/2027 + 0.7%
-   Echostar Communications Corp. 5% 3/15/2023 -2.0%
Frontier Communications Corp.   10.5% 9/15/2022
Teva Pharmaceutical Industries LTD   2.2% 7/21/2021
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.04% 0.33% 1.62% 6.39% 14.13% 17.02%
Mining -0.04% 0.95% 1.80% -1.41% 6.39% 1.26%
Construction -0.10% 0.06% 1.68% 4.21% 13.87% 10.58%
Manufacturing -0.05% -0.05% 1.13% 2.29% 10.56% 7.66%
Transportion, Communication, Electric/Gas -0.08% -0.04% 1.03% 3.58% 13.07% 10.19%
Wholesale -0.06% 0.15% 0.88% 2.21% 11.99% 7.58%
Retail 0.03% 0.41% 1.54% 2.10% 13.86% 9.83%
Finance, Insurance, Real-Estate -0.10% 0.02% 1.35% 3.72% 12.54% 10.41%
Services -0.07% 0.20% 1.48% 3.06% 12.11% 9.37%
Public Administration -0.18% -0.47% 0.83% 4.09% 12.60% 16.79%
Energy -0.06% 0.69% 1.89% -0.75% 7.28% 1.86%
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-09-12T171146.686

New Issues Forward Calendar

1. Level 3 Financing Inc. (USD) 4.625% 9/15/2027 Reg S (09/11/2019): 1000MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.63%.

2. KeHE Distributors (USD) 8.625% 10/15/2026 Reg S (09/11/2019): 200MM Second Lien Notes, Price at Issuance 100, Yielding 8.63%.

1. Calpine Corp.: $1.4B bonds, Expected Q3 2019

2. Atlantica Tender Drilling Ltd: $140MM, Expected Q3 2019

Additional Commentary

NEW ISSUANCE WATCH: on 09/12/19 participants welcome a $750M new corporate-bond offering by
Wynn Resorts LTD . The most recent data showed a significant flow into fixed income ETFs for the month of August, with a net inflow of $14.0 billion.
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)
Road King Infrastructure LTD (5Y Sen USD MR14)
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: 
  • YRC Worldwide Inc., Busy Bees Group LTD, Beazer Homes USA Inc, Murphy Oil USA Inc. 
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 18 bp (basis points), as of 09/12/19
  • 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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