Investment Grade Bond Research - August 27, 2019

Posted by Corey Mahoney on Aug 27, 2019 5:13:50 PM

ALTRIA BONDS SPIKE following confirmed merger talks with Phillip Morris discussing an all-stock merger reuniting the two companies. “With disruption facing the world of tobacco, we can see some merit in a re-merger.” Gold advanced 0.92 percent closing at $1551.3 per ounce. The 10-year note lost 5.5 basis points.  S&P -0.18%, DOW -0.31, NASDAQ -0.22%.

U.S. HOME PRICES DECELERATED for the fifteenth straight month posting a 3.1 percent year-over-year gain down from 3.3 percent in May. “Home price gains continue to trend down, but maybe leveling off to a sustainable level.” Despite lower mortgage rates buyers have not been enticed enough to move the pendulum 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, Altria Group Inc. (USD) 3.875% 9/16/2046 made analysts' 'Conviction Buy' list. (See the chart below for Altria Group bonds below) Corey Mahoney
Key Gainers and Losers Volume Leaders
+   Altria Group Inc. 5.8% 2/14/2039 + 4.3%
  HSBC Hldg PLC 3.803% 3/11/2025 + 0.4%
-   Bank of America Corp. VAR% PERP -1.4%
  Braskem SA 4.5% 1/10/2028 Reg S -0.4%
Apple Inc.   1.8% 5/11/2020
Intel Corp.   1.85% 5/11/2020
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.03% -0.15% 1.23% 3.01% 9.71% 9.31%
Mining -0.12% 0.58% 2.66% 5.63% 12.44% 10.60%
Construction -0.07% 0.25% 2.85% 5.89% 10.97% 10.19%
Manufacturing -0.05% 0.42% 3.02% 6.30% 10.94% 9.65%
Transportion, Communication, Electric/Gas -0.07% 0.59% 3.93% 7.88% 14.39% 13.57%
Wholesale -0.07% 0.39% 2.20% 5.06% 11.41% 9.87%
Retail -0.09% 0.66% 3.85% 7.59% 12.89% 11.68%
Finance, Insurance, Real-Estate -0.04% 0.28% 2.29% 4.56% 9.27% 9.25%
Services -0.06% 0.42% 3.16% 6.17% 11.00% 10.48%
Public Administration -0.01% 0.14% 1.46% 2.55% 4.66% 5.82%
Energy -0.11% 0.62% 2.69% 5.73% 12.87% 12.15%
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-08-27T170600.635

New Issues New Issues [Continued]

1. Texas Instruments Inc. (USD) 2.25% 9/4/2029 (08/26/2019):750MM Senior Unsecured Notes, Price at Issuance 99.689, Yielding 2.28%.

2. Canadian Imperial Bank of Commerce (CAD) 2.35% 8/28/2024 (08/26/2019): 1500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.35%.


Additional Commentary

NEW ISSUANCE WATCH: on 08/26/19 participants welcome a $750M new corporate-bond offering by
Texas Instruments 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 $4.07 billion.
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)
SuperValu Inc. (5Y Sen USD XR14)
Atmos Energy Corp. (5Y Sen USD MR14)

unnamed - 2019-08-01T153123.074

Loans and Credit Market Overview


Deals recently freed for secondary trading, notable secondary activity:
  • PaySimple Inc., Nike Inc., US Foods Inc., Duerre Group, Albertsons LLC, Helical 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 was 19 bp (basis points), as of 08/27/19
  • 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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