Investment Grade Bond Research - June 10, 2019

Posted by Corey Mahoney on Jun 10, 2019 5:22:27 PM

THE GAP BETWEEN JOB OPENINGS AND THE UNEMPLOYED WIDENED by the largest margin ever in April.  Job openings in education, retail, and construction far exceeded the number of unemployed Americans, at the end of April there were 7.449 million unfilled jobs.  Gold retreated after nine consecutive sessions of gains, settling 1.3 percent lower as U.S. and Mexico trade tensions regress.  The 10-year note rose 6.0 basis points.  S&P +0.56%, DOW +0.43, NASDAQ +1.18%. 

CONSUMER INFLATION EXPECTATIONS HAVE WORSENED according to a Fed survey, the official figures are published on Wednesday.  “One of the justifications for the Fed to cut rates this year will be the surprisingly weak inflation.”  Delivery of July crude oil settled 1.28 percent lower or $53.31 per barrel.  In May, OPEC nations produced 30.09 million barrels a day marking the lowest production levels since February 2015.  Despite Saudi Araba pumping 9.7 million barrels a day, a four-year low, the nation sees “the need to keep cuts around the current levels.”  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, MGM Resorts International (USD) 4.625% 9/1/2026 made analysts' 'Conviction Buy' lists. (See the chart for ADI indexes above.) Corey Mahoney (
Key Gainers and Losers Volume Leaders
+   Halfmoon Parent Inc. 4.9% 12/15/2048 144A + 0.0%
  United Technologies Corp. 3.125% 5/4/2027 + 0.6%
-   CVS Health Corp. 3.35% 3/9/2021 -0.1%
United Technologies Corp.   4.625% 11/16/2048
General Motors Co.   5.95% 4/1/2049
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.42% 0.64% 2.13% 4.47% 7.31% 5.08%
Mining 0.13% 0.02% 0.77% 3.37% 7.02% 7.13%
Construction 0.13% 0.18% 1.50% 3.56% 5.16% 6.32%
Manufacturing 0.17% 0.32% 1.39% 3.70% 5.91% 6.58%
Transportion, Communication, Electric/Gas 0.31% 0.23% 1.65% 4.82% 7.70% 9.30%
Wholesale 0.17% 0.23% 1.26% 3.57% 6.60% 7.02%
Retail 0.20% 0.17% 1.45% 3.68% 6.13% 6.79%
Finance, Insurance, Real-Estate 0.13% 0.25% 1.29% 3.15% 5.45% 6.92%
Services 0.14% 0.30% 1.68% 3.80% 6.22% 7.61%
Public Administration 0.26% 0.32% 1.38% 2.35% 3.07% 4.93%
Energy 0.15% -0.01% 0.77% 3.46% 7.34% 8.96%
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-06-10T172131.583

New Issues New Issues [Continued]

1. HSBC Bank Canada (CAD) 2.253% 9/15/2022 (06/10/2019):1000MM Senior Unsecured Notes, Price at Issuance 100.001, Yielding 2.25%.

2. AEP Transmission Co. (USD) 3.8% 6/15/2049 (06/10/2019):350MM Senior Unsecured Notes, Price at Issuance 99.556, Yielding 3.82%.


Additional Commentary

NEW ISSUANCE WATCH: on 6/10/19 participants welcome a $350MM new corporate-bond offering by AEP Transmission Co. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 6/7/19, with a net outflow of $3.2B, year-to-date $6.6B flowed into high-yield.
Top Widening Credit Default Swaps (CDS) Top Narrowing Credit Default Swaps (CDS)
Hertz Corp. (5Y Sen USD CR14)
Hovnanian Enterprises Inc. (5Y Sen USD MR14)
SuperValu Inc. (5Y Sen USD MR14)
Atmos Energy Corp. (5Y Sen USD MR14)

unnamed - 2019-05-28T172415.939

Loans and Credit Market Overview


Deals recently freed for secondary trading, notable secondary activity:
  • United PF Holdings LLC, Packers Holdings, Charles Schwab Corp., Tundra Energy Marketing
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 15 bp (basis points), as of 06/07/19
  • 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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