High Yield Bond Research - September 5, 2019

Posted by Corey Mahoney on Sep 5, 2019 5:05:22 PM
U.S. SERVICES SECTOR REPORTED ACCELERATED ACTIVITY in August as the economy added nearly 200,000 jobs according to ADP. The ISM for non-manufacturing activity index which accounts for two-thirds of U.S. economic output advanced to 56.4 from 53.7. While we don’t think that the government data will be as strong as the ADP data, the strength in the ADP report eases some concerns about downside risks in the labor market associated with the recent drop in business sentiment.”  The 10-year note spiked by 9.7 basis points. S&P +1.30%, DOW +1.41, NASDAQ +1.75%.
APPLE SOLD $7 BILLION OF BONDS on Thursday with the intent to repurchase common stock and for general corporate purposes. Apple announced earlier this year an increase to its share buyback program by $75 billion and holds more than $200 billion in cash. Treasury yields rose across the board following U.S. and China agreeing to meet in October supporting recent optimism. 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, Enbridge Inc. (USD) 5.5% 7/15/2077 made analysts' 'Conviction Buy' list (See the chart below for Enbridge Inc. bonds.) Corey Mahoney
Key Gainers and Losers Volume Leaders
+   Western Digital Corp. 4.75% 2/15/2026 + 0.3%
  Petrobras Global Finance BV 7.375% 1/17/2027 + 0.1%
-   Pacific Gas & Electric Co. 6.05% 3/1/2034 -0.6%
Teva Pharmaceuticals Fin BV   6.75% 3/1/2028
Expedia Inc.   4.5% 8/15/2024
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.24% 0.72% 1.45% 7.16% 13.76% 15.71%
Mining 0.17% -0.21% -2.49% -2.48% 5.10% -0.15%
Construction 0.13% 0.23% 1.48% 5.00% 13.70% 10.29%
Manufacturing 0.13% 0.22% 0.99% 3.26% 10.67% 7.73%
Transportion, Communication, Electric/Gas 0.12% 0.14% 1.04% 4.23% 12.59% 9.39%
Wholesale 0.07% 0.25% 0.36% 3.26% 11.33% 7.56%
Retail 0.18% 0.33% 0.29% 3.12% 14.00% 10.61%
Finance, Insurance, Real-Estate 0.15% 0.16% 0.78% 4.15% 12.04% 10.23%
Services 0.12% 0.26% 1.04% 3.73% 11.61% 9.01%
Public Administration 0.22% 0.32% 1.03% 5.91% 13.15% 17.61%
Energy 0.20% -0.11% -1.43% -1.23% 6.68% 1.30%
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-09-05T170137.999

New Issues Forward Calendar

1. Iron Mountain Inc. (USD) 4.875% 9/15/2029 144A (09/04/2019):1000MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.88%.

2. Seadrill New Finance Limited (USD) 12% 7/15/2025 (09/04/2019):476MM First Lien Notes, Price at Issuance 100, Yielding 12%.

1. General Electric Distributed Power: $600M high-yield bonds, Expected Q3 2019

2. Diamondback Energy Inc.: High-yield notes, Expected Q3 2019

Additional Commentary

NEW ISSUANCE WATCH: on 09/05/19 participants welcome a $425M new corporate-bond offering by
Hill-Rom Holdings Inc. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 8/16/19, with a net outflow of  $4.07B.
Top Widening Credit Default Swaps (CDS) Top Narrowing Credit Default Swaps (CDS)
Rite Aid Corp. (5Y Sen USD XR14)
Weatherford International LTD (5Y Sen USD MR14)
Cable & Wireless Communication (5Y Sen USD CR14)
SuperValu Inc. (5Y Sen USD MR14)

unnamed - 2019-08-01T153117.188

Loans and Credit Market Overview


Deals recently freed for secondary trading, 
notable secondary activity: 
  • Murphy Oil USA Inc., Electronic Arts Inc., AutoData, PaySimple Inc., Nike Inc., US 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 was 17 bp (basis points), as of 09/05/19
  • Net positive capital flows into high-yield ETFs & mutual funds 

Copyright 2019 Advantage Data Inc. All Rights Reserved. http://www.advantagedata.com

Information in this document should not be regarded as an offer to sell or solicitation of an offer to buy bonds or any financial instruments referred to herein. All information provided in this document is believed to be accurate. However, Advantage Data and its sources make no warranties, either express or implied, as to any matter whatsoever, including but not limited to warranties of merchantability or fitness for a particular purpose. Opinions in this document are subject to change without notice. Electronic redistribution, photocopying and any other electronic or mechanical reproduction is strictly prohibited without prior written permission from Advantage Data Inc.

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

Are you using AdvantageData?

AdvantageData is your fixed income solution for pricing, analytics, reports, and insight on approximately:

  • 500,000+ U.S. and international corporate bonds
  • Over 6,200+ CDS reference entities
  • Over 22,000+ syndicated loans
  • Over 100 equity markets worldwide
  • One platform 16 products and services from debt to CDS to loans to mid-market
  • Used by top buy and sell-side firms worldwide

Subscribe to Email Updates

Recent Posts