Investment Grade Bond Research - July 2, 2019

Posted by Corey Mahoney on Jul 2, 2019 5:05:00 PM

SAFE-HAVEN ASSETS ROSE against junk bonds in net prices linked to actual trades once again driving the 10-year note below 2 percent. Gold rallies Tuesday following its sharpest daily drop in more than a year “as global slowdown worries are growing” among the markets. Investors anxiously await payroll figures to be released on Friday after the Independence Day on Thursday to decide on their risk appetite. The 10-year note sank 4.8 basis points. S&P +0.29%, DOW +0.26, NASDAQ +0.22%.

CRUDE OIL PLUMMETED MORE THAN 4 PERCENT on demand concerns despite OPEC extending production cuts into 2020.  Investors fear sluggish manufacturing will impact oil demand, August crude declined 4.64 percent settling at $56.39 per barrel.  “Increasing indications of global economic slowing remain as the larger negative pricing consideration to the energy complex and OPEC’s need to extend production cuts even further would appear to attest to slowing economic growth paths.” ADI 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,  HJ Heinz Co. (USD) 2.85% 3/1/2022 made analysts' 'Conviction Buy' lists. (See the chart for HJ Heinz Co. bonds below.) Corey Mahoney (
Key Gainers and Losers Volume Leaders
+   Home Depot Inc. 3.9% 12/6/2028 + 0.3%
  AT&T Inc. 4.35% 3/1/2029 + 0.3%
-   Toronto-Dominion Bank 2.25% 11/5/2019 -0.0%
FedEx Corp.   4.05% 2/15/2048
Altria Group Inc.   2.85% 8/9/2022
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.02% 0.07% 1.79% 3.73% 8.57% 5.29%
Mining -0.07% 0.18% 1.98% 3.60% 9.17% 8.81%
Construction -0.06% 0.05% 1.67% 3.75% 7.56% 8.12%
Manufacturing -0.04% 0.12% 1.98% 3.94% 7.54% 7.64%
Transportion, Communication, Electric/Gas -0.03% 0.24% 2.24% 5.06% 9.78% 10.61%
Wholesale 0.01% 0.25% 1.60% 3.79% 8.37% 8.41%
Retail -0.07% 0.07% 2.09% 3.96% 8.12% 8.91%
Finance, Insurance, Real-Estate -0.08% -0.01% 1.23% 3.08% 6.36% 7.64%
Services -0.09% 0.03% 1.77% 3.85% 7.37% 8.54%
Public Administration -0.09% -0.06% 0.47% 2.09% 3.18% 4.73%
Energy -0.04% 0.18% 1.99% 3.81% 9.46% 9.69%
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-07-08T170427.097

New Issues New Issues [Continued]

1. Chaudiere Financial LP (CAD) 3.525% 12/31/2059 (07/01/2019):290MM Senior Unsecured Notes, Price at Issuance 100.014, Yielding 3.52%.


Additional Commentary

NEW ISSUANCE WATCH: on 7/1/19 participants welcome a $290MM new corporate-bond offering by Chaudiere Financial LP.  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 XR14)
Weatherford International LTD (5Y Sen USD MR14)
Cable & Wireless Communication (5Y Sen USD CR14)
Atmos Energy Corp. (5Y Sen USD MR14)

unnamed - 2019-06-27T171405.824

Loans and Credit Market Overview


Deals recently freed for secondary trading, notable secondary activity:
  • Valence Surface Technologies, Moneygram Intl. Inc., Vici Properties LLC, Vidrala SAdd
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 22 bp (basis points), as of 07/02/19
  • 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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