High Yield Bond Research - September 13, 2019

Posted by Corey Mahoney on Sep 13, 2019 5:03:37 PM
FANNIE AND FREDDIE MAC REVISED THEIR LENDING LIMITS on multi-family mortgages to $359 billion for 2019 from $339 billion in 2018. These new multifamily caps eliminate loopholes, provide ample support for the market without crowding out private capital.” The 10-year note spiked 12.4 basis points. S&P -0.16%, DOW +0.12, NASDAQ -0.28%.
PACIFIC GAS & ELECTRIC REACHED AN $11 BILLION SETTLEMENT with insurance companies relating to the deadly wildfires representing 85 percent of the insurance claims. “PG&E is taking money out of the pockets of people whose homes and businesses it burned down and handing the money to insurance companies to buy their cooperation.” PG&E remains under pressure and scrutiny as it emerges from chapter 11 bankruptcy. 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,  Pacific Gas & Electric Co. (USD) 3.75% 8/15/2042 made analysts' 'Conviction Buy' list (See the chart below for Pacific Gas & Electric Co.  bonds below) Corey Mahoney
Key Gainers and Losers Volume Leaders
+   US Steel Corp. 6.875% 8/15/2025 + 0.0%
  Petrobras Global Finance BV 6.85% 6/5/2115 + 0.6%
-   Petrobras Global Finance BV 7.375% 1/17/2027 -1.4%
Western Digital Corp.   4.75% 2/15/2026
HCA Inc.   5.25% 4/15/2025
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.14% -0.13% 1.13% 6.10% 13.99% 16.73%
Mining -0.07% 0.43% 1.87% -0.99% 6.42% 1.34%
Construction -0.07% -0.05% 1.64% 3.99% 13.76% 10.55%
Manufacturing 0.04% 0.11% 1.29% 2.59% 10.75% 7.79%
Transportion, Communication, Electric/Gas 0.01% -0.05% 1.03% 3.81% 13.05% 9.75%
Wholesale 0.05% 0.19% 1.08% 2.49% 11.77% 7.52%
Retail -0.02% 0.38% 1.68% 2.40% 13.96% 9.53%
Finance, Insurance, Real-Estate -0.02% -0.08% 1.17% 3.45% 12.55% 10.38%
Services -0.01% 0.07% 1.56% 3.14% 12.14% 9.22%
Public Administration -0.08% -0.47% 0.33% 3.98% 12.51% 16.93%
Energy -0.15% 0.18% 1.73% -0.37% 7.36% 1.93%
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-09-13T170125.584

New Issues Forward Calendar

1. iStar Inc. (USD) 4.75% 10/1/2024 (09/12/2019): 675MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.75%.

2. Patrick Industries Inc. (USD) 7.5% 10/15/2027 144A (09/12/2019): 300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 7.5%.

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

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

Additional Commentary

NEW ISSUANCE WATCH: on 09/13/19 participants welcome a $1200M new corporate-bond offering by
Uber Technologies Inc. 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)
Hertz Corp. (5Y Sen USD XR14)
Hovnanian Enterprises Inc. (5Y Sen USD MR14)
Cable & Wireless Communication (5Y Sen USD CR14)
SuperValu Inc. (5Y Sen USD MR14)

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 09/13/19
  • 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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