Investment Grade Bond Research - July 16, 2019

Posted by Pierre Robert on Jul 16, 2019 5:16:13 PM

ANHEUSER-BUSCH INBEV WORLDWIDE INC.  bonds were very active coming after a shelved plan to IPO $10 billion dollars in Hong Kong.  Over $130 million of Anheuser-Busch Inbev Worldwide Inc. (USD) 5.55% 1/23/2049 and Anheuser-Busch Inbev Worldwide Inc. (USD) 4.75% 1/23/2029 bonds traded today. Anheuser-Busch Inbev Worldwide Inc was planning to use the $10 billion to help reduce there $100 billion in debt.

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unnamed - 2019-06-27T171401.746
TREASURY YIELDS have continued  to rise and rally due to continued good economic news, finalizing budget negotiations and tariff war seeming to once again show a promise that a deal can be had. The key 10 year Treasury rate rose .03 to 2.122 or (+1.42%). Europe’s sovereign debt widely traded down. Franklin Templeton continues to feel that the economy is strong enough that 10 year treasury curve will return to at least 2.5%. ADI proprietary index data showed a net yield increment for high-yield versus high-grade bondsHigh-yield edged out high-grade.  Among high-yield bonds showing topmost price gains at appreciable volumes traded, Ferrellgas Partners LP (USD) 8.625% 6/15/2020 made analysts' 'Conviction Buy' lists. (See the chart for ADI index above.) Pierre Robert.
Key Gainers and Losers Volume Leaders
+   Microsoft Corp. 2% 11/3/2020 + 0.0%
  Vodafone Group PLC 5.25% 5/30/2048 + 0.8%
-   Anheuser-Busch Inbev Worldwide Inc. 5.55% 1/23/2049 -0.2%
Anheuser-Busch Inbev Worldwide Inc.   5.55% 1/23/2049
CVS Health Corp.   5.05% 3/25/2048
General Mills Inc.   4.7% 4/17/2048
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.21% -0.02% -0.08% 2.96% 8.02% 7.72%
Mining 0.13% -0.47% 1.48% 2.85% 8.96% 7.91%
Construction 0.09% -0.20% 1.27% 3.74% 7.37% 7.79%
Manufacturing 0.09% -0.37% 1.14% 3.42% 7.40% 6.90%
Transportion, Communication, Electric/Gas 0.21% -0.54% 1.51% 4.32% 9.59% 9.34%
Wholesale 0.05% -0.39% 0.81% 3.21% 8.11% 7.38%
Retail 0.11% -0.56% 1.25% 3.60% 7.92% 7.76%
Finance, Insurance, Real-Estate 0.06% -0.21% 0.73% 2.83% 6.37% 7.22%
Services 0.10% -0.36% 1.04% 3.49% 7.35% 7.74%
Public Administration 0.03% 0.09% 0.22% 2.02% 3.20% 4.61%
Energy 0.17% -0.47% 1.54% 2.99% 9.33% 8.40%
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-07-16T171339.093

New Issues New Issues [Continued]

1. Burlington Northern Santa Fe Corp. (USD) 3.55% 2/15/2050 (07/15/2019): 825MM Senior Unsecured Notes, Price at Issuance 99.702, Yielding 3.57%.

2. Cooperatieve Rabobank U.A. (USD) 2.625% 7/22/2024 144A (07/15/2019): 1000MM Senior Non Preferred Notes, Price at Issuance 99.763, Yielding 2.68%.

3. Bank of Nova Scotia (USD) 2.375% 1/18/2023 (07/15/2019):500MM Senior Unsecured Notes, Price at Issuance 99.953, Yielding 2.39%.


Additional Commentary

NEW ISSUANCE WATCH: on 7/16/19 participants welcome a $805MM new corporate-bond offering by British Airways.  The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 6/21/19, with a net outflow of $602MM, year-to-date $8.9B flowed into high-yield. 
Top Widening Credit Default Swaps (CDS) Top Narrowing Credit Default Swaps (CDS)
Rite Aid Corp. (5Y Sen USD MR14)
Rite Aid Corp. (5Y Sen USD XR14)
Road King Infrastructure LTD (5Y Sen USD CR14)
SuperValu Inc. (5Y Sen USD MR14)

unnamed - 2019-06-27T171405.824

Loans and Credit Market Overview


Deals recently freed for secondary trading, notable secondary activity:
  • Consolidated Precision Products, Starwood Property Trust Inc., Heritage Power, LLC
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 18 bp (basis points), as of 07/16/19
  • 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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