Investment Grade Bond Research - July 19, 2019

Posted by Andrew Robartes on Jul 19, 2019 5:30:00 PM
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U.S. STOCKS ROSE THEN FELL today as investors weigh the possibility of an interest-rate cut. Oil futures rose this afternoon, but end the week down 7% amid tensions with Iran. The 10-year note rose 2.5 basis points. S&P -0.62%, DOW -0.25, NASDAQ -0.74%.


IN THE CORPORATE BOND SPACE, Hertz Corporation priced $500 million worth of senior unsecured notes. The car rental company, which is a subsidiary of Hertz Global Holdings Inc., plans to use the proceeds to consummate the redemption of outstanding notes, pay interest, and for general corporate purposes. The notes will yield 7.125% and will mature in August of 2026ADI proprietary index data showed a net yield increment for high-yield versus high-grade bondsHigh-grade edged out high-yield.  Among high-grade bonds showing topmost price gains at appreciable volumes traded, Southern California Gas (USD) 4.125% 6/1/2048 made analysts' 'Conviction Buy' lists. (See the chart for Southern California Gas (USD) 4.125% 6/1/2048 below.Andrew Robartes (arobartes@advantagedata.com)
 
Key Gainers and Losers Volume Leaders
+   CVS Health Corp. 5.05% 3/25/2048 + 0.2%
  Bank of America Corp. 4.078% 4/23/2040 + 0.4%
-   General Electric Co. FLT% PERP (1) -2.1%
  McKesson Corp. 4.75% 5/30/2029 -0.3%
CVS Health Corp.   4.3% 3/25/2028
General Electric Co.   FLT% PERP (1)
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.23% 0.46% 0.38% 3.23% 8.68% 8.50%
Mining -0.00% 0.26% 1.39% 3.25% 9.29% 8.45%
Construction 0.12% 0.50% 1.34% 4.02% 7.50% 7.86%
Manufacturing 0.09% 0.28% 1.05% 3.78% 7.73% 7.26%
Transportion, Communication, Electric/Gas 0.12% 0.43% 1.39% 4.65% 10.02% 10.08%
Wholesale 0.06% 0.41% 1.17% 3.72% 8.78% 8.01%
Retail 0.03% 0.32% 1.11% 3.98% 8.13% 8.42%
Finance, Insurance, Real-Estate 0.09% 0.28% 0.77% 3.10% 6.69% 7.60%
Services 0.06% 0.33% 1.00% 3.94% 7.64% 8.20%
Public Administration 0.10% 0.34% 0.50% 2.19% 3.42% 5.10%
Energy 0.03% 0.27% 1.45% 3.41% 9.59% 9.00%
 
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-07-22T102852.114

New Issues New Issues [Continued]

1. Bank of America Corp. (USD) 3.194% 7/23/2030 (07/18/2019):2500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.19%.

2. Toyota Motor Credit Corp. (USD) 2.41% 7/25/2024 (07/18/2019):68MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.41%.

 

Additional Commentary


NEW ISSUANCE WATCH: on 7/19/19 participants welcome a $900MM new corporate-bond offering by PNC Bank NA 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)
Weatherford International LTD (5Y Sen USD XR14)
Hertz Corp. (5Y Sen USD CR14)
San Miguel Corp. (5Y Sen USD CR14)
Atmos Energy Corp. (5Y Sen USD MR14)

unnamed - 2019-07-18T170901.482

Loans and Credit Market Overview


SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, notable secondary activity:
  • Sunshine Luxembourg VII Sarl, Consolidated Precision Products
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 26 bp (basis points), as of 07/19/19
  • 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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