Investment Grade Bond Research - August 28, 2019

Posted by Corey Mahoney on Aug 28, 2019 5:21:43 PM

U.S. MONEY MARKET FUND ASSETS retreat from decade highs as investors pause pouring money into these low-risk assets. The spread between the 3 month T-bill and 10-year note widened to 55 basis points, levels not seen since 2007. The 10-year note shed 0.1 basis points. S&P +0.57%, DOW +0.88, NASDAQ +0.35%.

CRUDE OIL SUPPLIES CLIMB 2 PERCENT FOLLOWING a significant drop in weekly supplies, WTI Crude settled at $55.84 per barrel. “The ongoing trend of narrowing net imports has yielded a massive draw to crude stocks, with imports dropping below 6 million barrels per day, and exports jumping above 3 million barrels per day.” 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, Burlington Northern Santa Fe Corp (USD) 6.53% 7/15/2037 made analysts' 'Conviction Buy' list. (See the chart below for Burlington Northern Santa Fe Corpbonds below) Corey Mahoney
Key Gainers and Losers Volume Leaders
+   HSBC USA Inc. 2.75% 8/7/2020 + 0.0%
  Toyota Motor Credit Corp. 1.9% 4/8/2021 + 0.2%
-   Altria Group Inc. 5.95% 2/14/2049 -0.6%
CVS Health Corp.   5.05% 3/25/2048
General Electric Co.   FLT% PERP (1)
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.35% 0.20% 1.57% 3.37% 10.10% 9.90%
Mining 0.30% 0.59% 3.03% 6.12% 13.03% 11.26%
Construction 0.29% 0.40% 2.78% 6.13% 10.46% 9.60%
Manufacturing 0.29% 0.47% 3.46% 6.89% 11.65% 10.31%
Transportion, Communication, Electric/Gas 0.41% 0.70% 4.52% 8.59% 15.24% 14.48%
Wholesale 0.20% 0.35% 2.34% 5.36% 11.85% 10.35%
Retail 0.34% 0.66% 4.14% 7.77% 13.00% 11.96%
Finance, Insurance, Real-Estate 0.19% 0.29% 2.48% 4.75% 9.55% 9.56%
Services 0.28% 0.49% 3.55% 6.66% 11.47% 11.03%
Public Administration 0.01% 0.07% 1.58% 2.72% 4.91% 6.09%
Energy 0.30% 0.66% 3.08% 6.15% 13.29% 12.70%
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-08-28T171917.504

New Issues New Issues [Continued]

(None Current 08/28/2019)



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)
Weatherford International LTD (5Y Sen USD XR14)
Hertz Corp. (5Y Sen USD CR14)
Cable & Wireless Communication (5Y Sen USD CR14)
SuperValu Inc. (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 15 bp (basis points), as of 08/28/19
  • 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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