Investment Grade Bond Research - August 14, 2019

Posted by Pierre Robert on Aug 15, 2019 10:38:06 AM

THE 10 YEAR TREASURY FELL BELOW 1.6 TO 1.581. All US stock exchanges have fallen more then 2%. The inverted treasury curve issue has caused all markets to fall significantly. Similarly, the 10-Year Treasury note fell to 1.58%. S&P -2.79%, DOW -2.91%, NASDAQ -2.86%.

CVS BONDS fully tender offered their 3.125% Senior Notes due 2020, 4.125% Senior Notes due 2021, 4.125% Senior notes due 2021, 5.450% Senior Notes due 2021 causing CVS to be a very active trading in the midst of high volitility.  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, Verizon Communications Inc. (USD) 5.15% 9/15/2023 made analysts' 'Conviction Buy' lists. (See the chart for Verizon Communications Inc. below) Pierre Robert
Key Gainers and Losers Volume Leaders
+   IBM Corp. 3.5% 5/15/2029 + 0.4%
-   Santander UK PLC 2.875% 8/5/2021 -0.1%
  Mylan Inc. 3.95% 6/15/2026 -0.0%
CVS Health Corp.   5.05% 3/25/2048
Verizon Communications Inc.   4.5% 8/10/2033
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.30% -0.08% 0.96% 2.79% 9.29% 8.71%
Mining 0.18% 0.47% 2.08% 4.85% 11.20% 9.75%
Construction -0.09% 0.11% 2.22% 5.52% 9.29% 8.72%
Manufacturing 0.23% 0.63% 2.83% 5.92% 10.45% 9.63%
Transportion, Communication, Electric/Gas -0.01% 0.65% 3.93% 7.43% 13.47% 12.87%
Wholesale 0.16% 0.31% 2.36% 4.89% 11.10% 9.97%
Retail 0.16% 0.67% 3.25% 6.51% 11.40% 11.02%
Finance, Insurance, Real-Estate 0.10% 0.38% 2.11% 4.34% 8.92% 9.24%
Services 0.09% 0.63% 2.85% 5.83% 10.21% 10.31%
Public Administration 0.18% 0.35% 1.17% 2.38% 4.38% 5.65%
Energy 0.15% 0.38% 2.21% 5.09% 11.51% 10.16%
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-08-15T103656.042

New Issues New Issues [Continued]

1. Hallmark Financial Services, Inc. (USD) 6.25% 8/15/2029 (08/13/2019): 50MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.25%.

2. United Parcel Service Inc. (USD) 2.2% 9/1/2024 (08/13/2019):400MM Senior Unsecured Notes, Price at Issuance 99.914, Yielding 2.22%.


Additional Commentary

NEW ISSUANCE WATCH: on 8/09/19 participants welcome $1000 million in new corporate-bond offerings by Barclay Bank. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 8/9/19, with a net outflow of $4 billion since October 2018.
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 MR14)
Hovnanian Enterprises Inc. (5Y Sen USD MR14)
Ghana, Republic of (5Y Sen USD CR14)
Cable & Wireless Communication (5Y Sen USD CR14)

unnamed - 2019-08-13T170458.248

Loans and Credit Market Overview


Deals recently freed for secondary trading, notable secondary activity:
  • Duerre Group, Albertsons LLC, Helical PLC, London Stock Exchange Group PLC
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 17 bp (basis points), as of 08/13/19
  • Net positive capital flows into high-yield ETFs & mutual funds

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

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