Investment Grade Bond Research - June 14, 2019

Posted by Corey Mahoney on Jun 14, 2019 5:09:04 PM

STOCKS INITIALLY FELL ON FRIDAY following weak industrial growth from China surprising investors reporting a 17-year low. “The China data certainly is far-reaching, impacting not only China but global markets as well.” Investors will keep a keen eye on the Feds meeting next week speculating on a rate cut. The 10-year note lost 0.1 basis points. Equities recovered in the afternoon from China's disappointing data, S&P +0.03%, DOW +0.14, NASDAQ -0.28%.

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unnamed - 2019-05-28T172430.662
STRONG RETAIL SALES drove the economy higher as sales rose 0.5 percent in May reassuring investors the economy is on solid ground.  Consumer spending accounts for more than two-thirds of the economy, in addition, the service sector represents 88 percent of GDP “All the indications continue to be really strong in terms of unemployment, customer confidence” US industrial production bounced back in May rising 0.4 percent. 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, Xerox Corp. (USD) 4.8% 3/1/2035 made analysts' 'Conviction Buy' lists. (See the chart for Xerox Corp. bonds below.) Corey Mahoney (
Key Gainers and Losers Volume Leaders
+   GE Capital Intl. Funding Co. 4.418% 11/15/2035 + 0.2%
  US Bancorp 2.35% 1/29/2021 + 0.0%
-   Cisco Systems Inc. 2.2% 2/28/2021 -0.1%
Verizon Communications Inc.   4.125% 3/16/2027
Cisco Systems Inc.   2.2% 2/28/2021
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.27% 0.65% 1.83% 4.55% 7.59% 5.22%
Mining 0.12% 0.29% 1.16% 3.32% 7.30% 7.50%
Construction 0.09% 0.29% 2.03% 4.18% 6.20% 7.77%
Manufacturing 0.13% 0.33% 1.64% 3.65% 6.18% 6.82%
Transportion, Communication, Electric/Gas 0.14% 0.36% 1.90% 4.66% 7.89% 9.66%
Wholesale 0.02% 0.30% 1.28% 3.58% 7.16% 7.38%
Retail 0.14% 0.34% 1.58% 3.59% 6.36% 7.04%
Finance, Insurance, Real-Estate 0.10% 0.19% 1.25% 3.02% 5.52% 7.12%
Services 0.15% 0.32% 1.88% 3.72% 6.34% 7.85%
Public Administration 0.11% 0.21% 1.02% 2.31% 3.02% 4.96%
Energy 0.09% 0.28% 1.24% 3.43% 7.56% 9.53%
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-06-14T170423.803

New Issues New Issues [Continued]

1. Canadian Imperial Bank of Commerce (CAD) 2.95% 6/19/2029 (06/13/2019): 1500MM Subordinated Notes, Price at Issuance 99.995, Yielding 2.95%.

2. Fengate Central Health, LP (CAD) 3.365% 2/28/2051 (06/13/2019):69MM Secured Notes, Price at Issuance 100, Yielding 3.37%.


Additional Commentary

NEW ISSUANCE WATCH: on 6/13/19 participants welcome a $150MM new corporate-bond offering by John Deere Financial LTD. 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 MR14)
Hertz Corp. (5Y Sen USD XR14)
SuperValu Inc. (5Y Sen USD MR14)
San Miguel Corp. (5Y Sen USD CR14)

unnamed - 2019-05-28T172415.939

Loans and Credit Market Overview


Deals recently freed for secondary trading, notable secondary activity:
  • Perforce Software Inc., Avantor Performance Materials Inc., United PF Holdings LLC
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 24 bp (basis points), as of 06/14/19
  • 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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