Investment Grade Bond Research - August 1, 2019

THE MARKETS ROSE THEN FELL SHARPLY TODAY after the White House announced an additional 10% Tariff on Chinese goods beginning next month. The news came after a 300 point rebound from Wednesday’s interest rate cut-related losses.The 10-Year US Treasury note fell 11.3 basis points. S&P -0.90%, DOW -1.05%, NASDAQ -0.79%

IN THE CORPORATE BOND SPACE, Ryder System Inc. (NYSE: R) priced $550 million worth of senior unsecured notes that will yield 2.5% and mature on September 1, 2024. This pricing comes 2 days after the transportation and supply chain management company reported record high Q2 revenue. According to CEO Robert Sanchez, “Despite a softer freight environment compared to 2018, we delivered double-digit operating revenue growth driven by strong performance in our contractual dedicated transportation, supply chain and lease businesses”. 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, MetLife Inc. (USD) 2.463% 12/15/2044 made analysts' 'Conviction Buy' lists. (See the chart for MetLife Inc. below.) Andrew Robartes 

 

Key Gainers and Losers	Volume Leaders
+   CVS Health Corp. 5.05% 3/25/2048 + 0.8%   General Electric Co. FLT% PERP (1) + 2.2% -   General Electric Co. 4.5% 3/11/2044 -0.1%   JPMorgan Chase & Co. 4.625% PERP -2.6%	Energy Transfer Partners LP   6.25% 4/15/2049 IBM Corp.   4.15% 5/15/2039

Industry Returns Tracker

Industry Past Day Past Week Past Month Past Quarter YTD Past Year Agriculture, Forestry, Fishing 0.19% 0.05% -0.32% 3.04% 8.60% 8.48% Mining 0.25% 0.15% 0.20% 3.21% 9.85% 8.73% Construction 0.18% 0.33% 0.73% 3.91% 7.95% 8.30% Manufacturing 0.18% 0.10% 0.45% 3.81% 8.32% 7.84% Transportion, Communication, Electric/Gas 0.28% 0.24% 0.64% 4.77% 10.74% 10.48% Wholesale 0.17% 0.04% 0.47% 3.52% 9.26% 8.62% Retail 0.15% 0.03% 0.33% 4.00% 8.82% 8.84% Finance, Insurance, Real-Estate 0.10% 0.05% 0.35% 2.94% 7.03% 7.84% Services 0.18% -0.02% 0.28% 3.83% 8.15% 8.58% Public Administration 0.01% -0.00% 0.08% 1.80% 3.35% 5.20% Energy 0.24% 0.06% 0.13% 3.28% 10.06% 9.00%   Total returns (non-annualized) by rating, market weighted.

New Issues	New Issues [Continued]
1. The Trustees Of The University Of Pennsylvania (USD) 3.61% 2/15/2119 (08/01/2019): 300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.61%. 2. Ryder System Inc. (USD) 2.5% 9/1/2024 (08/01/2019): 550MM Senior Unsecured Notes, Price at Issuance 99.919, Yielding 2.52%.

NEW ISSUANCE WATCH: on 8/01/19 participants welcome $550 million in new corporate-bond offerings by
Ryder System Inc. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 7/26/19, with a net inflow of $1.3B, Seven week total $9.0B flowed into high-yield. 

 

Top Widening Credit Default Swaps (CDS)	Top Narrowing Credit Default Swaps (CDS)
Weatherford International LTD (5Y Sen USD XR14) Hertz Corp. (5Y Sen USD MR14)	SuperValu Inc. (5Y Sen USD XR14) Atmos Energy Corp. (5Y Sen USD MR14)

Loans and Credit Market Overview

SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, notable secondary activity:

• London Stock Exchange Group PLC, Maxamcorp Holding SL, PLZ Aeroscience Corp.

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 21 bp (basis points), as of 08/01/19
• 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.