Investment Grade Bond Research - June 3, 2019

Posted by Corey Mahoney on Jun 3, 2019 5:56:00 PM

MANUFACTURING IN MAY EXPANDED AT ITS SLOWEST RATE in over two years slipping to 52.1 from 52.8 from April. The sentiment downturn is linked to recent trade threats made by the White House and indications pointing to a slowing global economy. The sector is also being hindered by responses from countries following increased tariffs from the US. The 10-year note further fell 5.6 basis points. S&P-0.61%, DOW -0.30%, NASDAQ -1.97%. 

THE BOND MARKET RALLY CONTINUES into June as investors flee to safe-haven assets amidst global uncertainty and volatile equity markets G component Google parent Alphabet of the FAANG group sank 6.72 percent following the Department of Justice launching an antitrust investigation blocking competition dragging the Nasdaq Composite near correction territory.   Investors fear tech companies face scrutiny and this is the tip of the iceberg, "secured the rights to begin a potential investigation of Facebook Inc. [S: FB] and whether it has engaged in unlawful monopolistic practices".  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, Kraft Foods Inc. (USD) 5% 6/4/2042 made analysts' 'Conviction Buy' lists. (See the chart for Kraft Foods Inc. bonds below.) Corey Mahoney (
Key Gainers and Losers Volume Leaders
+   Microsoft Corp. 2.375% 2/12/2022 + 0.4%
  GE Capital Intl. Funding Co. 4.418% 11/15/2035 + 0.0%
-   Verizon Communications Inc. 4.522% 9/15/2048 -0.1%
CVS Health Corp.   5.05% 3/25/2048
Microsoft Corp.   2.375% 2/12/2022
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.12% 0.72% 1.21% 4.17% 6.47% 5.02%
Mining 0.23% 0.57% 0.70% 3.91% 7.22% 6.52%
Construction 0.38% 0.74% 1.51% 4.44% 5.76% 6.19%
Manufacturing 0.32% 0.72% 1.13% 3.76% 5.63% 5.82%
Transportion, Communication, Electric/Gas 0.45% 1.03% 1.57% 5.25% 7.48% 8.45%
Wholesale 0.20% 0.56% 0.99% 3.66% 6.62% 6.21%
Retail 0.40% 0.83% 1.25% 4.01% 6.06% 6.19%
Finance, Insurance, Real-Estate 0.28% 0.58% 1.13% 3.28% 5.29% 6.39%
Services 0.37% 0.86% 1.43% 3.88% 5.81% 6.81%
Public Administration 0.33% 0.62% 1.21% 2.51% 2.74% 4.43%
Energy 0.21% 0.58% 0.74% 4.01% 7.42% 8.22%
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-06-04T121016.893

New Issues New Issues [Continued]

1. Public Service Enterprise Group (USD) 2.875% 6/15/2024 (06/03/2019): 750MM Senior Unsecured Notes, Price at Issuance 99.953, Yielding 2.88%.

2. Home Depot Inc. (USD) 2.95% 6/15/2029 (06/03/2019): 1000MM Senior Unsecured Notes, Price at Issuance 99.426, Yielding 3.02%.


Additional Commentary

NEW ISSUANCE WATCH: on 6/3/19 participants welcome a $425MM new corporate-bond offering by Dayton Power & Light Co. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 5/31/19, with a net outflow of $1.3B, year-to-date $9.8B flowed into high-yield.
Top Widening Credit Default Swaps (CDS) Top Narrowing Credit Default Swaps (CDS)
Weatherford International LTD (5Y Sen USD XR14)
Hertz Corp. (5Y Sen USD CR14)
Cable & Wireless Communication (5Y Sen USD CR14)
SuperValu Inc. (5Y Sen USD MR14)

unnamed - 2019-05-28T172415.939

Loans and Credit Market Overview


Deals recently freed for secondary trading, notable secondary activity:
  • Charles Schwab Corp., Tundra Energy Marketing , Louis Dreyfus Corp.
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 17 bp (basis points), as of 06/03/19
  • 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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