Investment Grade Bond Research - July 23, 2019

Posted by Pierre Robert on Jul 23, 2019 5:26:19 PM

SOVEREIGN BENCHMARKS yields in Europe, Canada and United States were noticeably higher. The UK yield curve were sharply lower as Boris Johnson was voted Tory leader and Prime Minister. Boris Johnson has vowed to get Brexit done this fall and investors are noticeably worried that it may be done in a destructive manor. S&P -0.62%, DOW -0.25, NASDAQ -0.74%.

A MAJOR LAWSUIT WAS FILED against Walmart, Walgreens, CVS, Rite Aid and other superstores and chain drugstores for their corporate complicity in the opioid epidemic. CVS Health Corp (USD) 4.3% 3/25/2028, Wal-Mart Stores Inc. (USD) 2.85% 6/23/2020, CVS Health Corp (USD) 5.05% 3/25/2048 and CVS Health Corp. (USD) 2.8% 7/20/2020 were among the largest trading bonds by volume over the last several days. ADI proprietary index data showed a net yield increment for high-grade versus high-yield bondsHigh-yield edged out high-grade.  Among high-yield 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.) Pierre Robert
Key Gainers and Losers Volume Leaders
+   General Electric Co. FLT% PERP (1) + 0.1%
  Morgan Stanley VAR% 1/23/2030 + 0.1%
-   Caterpillar Financial Services Corp. 2.1% 1/10/2020 -0.2%
  CVS Health Corp. 4.3% 3/25/2028 -0.1%
  CVS Health Corp. 5.05% 3/25/2048 -0.3%
CVS Health Corp.   4.3% 3/25/2028
General Motors Financial Co. Inc.   5.65% 1/17/2029
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.01% 0.52% -0.08% 3.14% 8.59% 8.43%
Mining 0.05% -0.02% 0.62% 3.34% 9.35% 8.44%
Construction 0.02% 0.22% 0.79% 3.83% 7.51% 7.76%
Manufacturing 0.06% 0.31% 0.70% 4.05% 7.84% 7.44%
Transportion, Communication, Electric/Gas 0.10% 0.39% 0.91% 4.90% 10.08% 10.19%
Wholesale 0.06% 0.45% 0.79% 3.74% 8.68% 8.27%
Retail 0.07% 0.24% 0.67% 4.37% 8.61% 8.60%
Finance, Insurance, Real-Estate 0.04% 0.20% 0.54% 3.21% 6.70% 7.59%
Services 0.06% 0.23% 0.56% 4.02% 7.56% 8.17%
Public Administration 0.03% 0.16% 0.30% 2.31% 3.49% 5.14%
Energy 0.07% -0.02% 0.64% 3.54% 9.53% 8.81%
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-07-23T172504.579

New Issues New Issues [Continued]

1. Tampa Electric Co. (USD) 3.625% 6/15/2050 (07/22/2019): 300MM Senior Unsecured Notes, Price at Issuance 98.774, Yielding 3.69%.

2. FedEx Corp. (USD) 3.1% 8/5/2029 (07/22/2019): 1000MM Senior Unsecured Notes, Price at Issuance 99.666, Yielding 3.14%.

3. Synchrony Financial (USD) 2.85% 7/25/2022 (07/22/2019): 750MM Senior Unsecured Notes, Price at Issuance 99.937, Yielding 2.87%.


Additional Commentary

NEW ISSUANCE WATCH: on 7/23/19 participants welcome $4.7 billion in  new corporate-bond offerings by UnitedHealth Group IncThe most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 7/19/19, with a net inflow of $570MM, six week total $7.4B flowed into high-yield. 
Top Widening Credit Default Swaps (CDS) Top Narrowing Credit Default Swaps (CDS)
Rite Aid Corp. (5Y Sen USD MR14)
Weatherford International LTD (5Y Sen USD MR14)
Road King Infrastructure LTD (5Y Sen USD CR14)
SuperValu Inc. (5Y Sen USD MR14)

unnamed - 2019-07-18T170901.482

Loans and Credit Market Overview


Deals recently freed for secondary trading, notable secondary activity:
  • NGPL Pipeco LLC, Whatabrands LLC,Electricite de France, STAG Industrial Inc.
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 07/23/19
  • 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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