Investment Grade Bond Research - July 8, 2019

Posted by Andrew Robartes on Jul 8, 2019 5:12:35 PM
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U.S. STOCKS FELL TODAY, but all three major indices remain near record highs. Despite news of above-expected job growth in June, many investors anticipate an interest-rate cut at the end of the month, driving stock prices up. 10-Year Treasury yields fell 1.5 basis points as global investors continue to move into U.S. Government Bonds. S&P -0.48%, DOW -0.43%, NASDAQ -0.78%

IN THE CORPORATE BOND SPACE, Virginia Electric & Power Co. priced $500 million worth of senior unsecured notes. This announcement comes on what has otherwise been a very quiet day for issuing corporate debt. The investment-grade notes have a coupon of 2.875% and mature on July 15, 2029. 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,  Pacific Gas & Electric Co. (USD) 2.45% 8/15/2022 made analysts' 'Conviction Buy' lists. (See the chart for ADI Indices above.) Andrew Robartes (
Key Gainers and Losers Volume Leaders
+   AT&T Inc. 4.55% 3/9/2049 + 0.2%
  Oracle Corp. FLT% 10/8/2019 + 0.0%
-   CVS Health Corp. 5.05% 3/25/2048 -0.6%
  Daimler Chrysler North American Hldg 8.5% 1/18/2031 -0.9%
Broadcom Corp.   3.875% 1/15/2027
CVS Health Corp.   5.05% 3/25/2048
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.01% -0.05% 1.12% 3.09% 6.66% 5.40%
Mining -0.39% 0.08% 2.30% 3.85% 9.51% 9.04%
Construction -0.25% 0.29% 2.07% 4.35% 7.84% 8.30%
Manufacturing -0.40% -0.01% 1.89% 3.96% 7.70% 7.59%
Transportion, Communication, Electric/Gas -0.46% 0.08% 2.48% 5.01% 9.91% 10.40%
Wholesale -0.37% -0.05% 1.63% 3.78% 8.48% 8.22%
Retail -0.60% -0.16% 2.12% 4.19% 8.37% 8.63%
Finance, Insurance, Real-Estate -0.33% -0.08% 1.02% 2.95% 6.19% 7.42%
Services -0.43% -0.14% 1.75% 3.92% 7.64% 8.56%
Public Administration -0.17% -0.10% 0.22% 2.02% 3.21% 4.69%
Energy -0.46% 0.02% 2.29% 3.89% 9.77% 9.44%
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-07-08T171118.879

New Issues New Issues [Continued]

1. Virginia Electric & Power Co. (USD) 2.875% 7/15/2029 (07/08/2019): 500MM Senior Unsecured Notes, Price at Issuance 99.965, Yielding 2.88%.


Additional Commentary

NEW ISSUANCE WATCH: on 7/8/19 participants welcome a $500MM new corporate-bond offering by Virginia Electric & Power Co.  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)
SuperValu Inc. (5Y Sen USD MR14)
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:
  • Piaggio & C. SpA, Goshawk Aviation Ltd, Valence Surface Technologies
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 10 bp (basis points), as of 07/08/19
  • 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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