Investment Grade Bond Research - July 25, 2019

Posted by Pierre Robert on Jul 25, 2019 5:08:33 PM

SOVEREIGN YIELD CURVES in Europe were mixed to lower. The UK curve  was lower. Canada and United States sovereign curve was higher. Brexit the new prime minister is still on everyone’s mind. S&P -0.62%, DOW -0.25, NASDAQ -0.74%.

unnamed - 2019-07-18T170855.947

SPRINT NEWTEL, T-MOBILE AND DISH’s bonds were noticibly active due to Sprint and T-Mobile reaching an agreement with DISH to buy wireless assets. Since Dish would become a 4th major carrier, the sentiment strongly indicates the deal will go through. Among the bonds traded: Sprint Nextel Corp. (USD) 7.875% 9/15/2023, Sprint Capital Corporation (USD) 8.75% 3/15/2032, Sprint Capital Corporation (USD) 6.875% 11/15/2028, Sprint Corp. (USD) 7.125% 6/15/2024, Dish DBS Corp. (USD) 7.75% 7/1/2026, Dish DBS Corp. (USD) 5.875% 11/15/2024, T-Mobile USA Inc. (USD) 4.75% 2/1/2028.  ADI proprietary index data showed a net yield increment for high-grade versus high-yield bondsHigh-grade edged out high-yield.  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
+   CVS Health Corp. 4.3% 3/25/2028 + 0.5%
  Anheuser-Busch Inbev Worldwide Inc. 4% 4/13/2028 + 0.2%
-   AT&T Inc. 4.5% 3/9/2048 -0.1%
  Royal Bank of Scotland PLC 4.445% 5/8/2030 -0.1%
AT&T Inc.   4.5% 3/9/2048
CVS Health Corp.   5.125% 7/20/2045
CVS Health Corp.   4.3% 3/25/2028
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.02% 0.11% -0.29% 2.95% 8.55% 8.47%
Mining 0.10% -0.02% 0.29% 3.04% 9.41% 8.74%
Construction -0.01% 0.00% 0.46% 3.61% 7.46% 8.04%
Manufacturing 0.11% 0.28% 0.50% 3.78% 7.86% 7.67%
Transportion, Communication, Electric/Gas 0.18% 0.33% 0.65% 4.62% 10.26% 10.59%
Wholesale 0.06% 0.30% 0.70% 3.70% 8.87% 8.59%
Retail 0.10% 0.13% 0.41% 3.95% 8.39% 8.67%
Finance, Insurance, Real-Estate 0.07% 0.14% 0.28% 2.85% 6.51% 7.73%
Services 0.12% 0.21% 0.34% 3.93% 8.09% 8.69%
Public Administration 0.02% 0.00% 0.03% 1.87% 3.32% 5.13%
Energy 0.11% 0.03% 0.30% 3.23% 9.67% 9.11%
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-07-25T170703.004

New Issues New Issues [Continued]

1. Boston Gas Co. (USD) 3.001% 8/1/2029 144A (07/24/2019):500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3%.

2. Constellation Brands Inc. (USD) 3.15% 8/1/2029 (07/24/2019):800MM Senior Unsecured Notes, Price at Issuance 99.957, Yielding 3.15%.


Additional Commentary

NEW ISSUANCE WATCH: on 7/25/19 participants welcome $1 billion in  new corporate-bond offerings by Pepsico. The 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)
Hertz Corp. (5Y Sen USD CR14)
Road King Infrastructure LTD (5Y Sen USD CR14)

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 18 bp (basis points), as of 07/25/19
  • 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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