Investment Grade Bond Research - June 5, 2019

Posted by Corey Mahoney on Jun 5, 2019 5:20:36 PM

INVESTMENT GRADE DEBT ROSE AGAINST ITS HIGH YIELDING COUNTERPARTS in net prices linked to actual trades. The service sector carried the economy in May with a solid performance contrary to recent manufacturing and consumer spending reports. The Fed is overall pleased with the economy as it expanded at “a modest pace overall” showing resilience despite the escalation of trade tensions and a tight labor market. The 10-year note further dipped 2.2 basis points.  S&P +-0.54%, DOW +0.56, NASDAQ +0.35%. 

THE U.S. PRIVATE SECTOR ADDED A DISMAL 27,000 JOBS in the month of May according to an ADP report substantially less than the estimated 173,000 new jobs.  Employers continue to struggle with sourcing labor, “Labor shortages are impeding job growth, particularly at small companies, and layoffs at bricks-and-mortar retailers are hurting”.  The number of Americans applying for a mortgage increased last week amid mortgage rates falling to 17-month lows.  Underlining data revealed the spike in activity is due to homeowners refinancing not homebuyers, refinances are up 33 percent year-over-year.  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, Citigroup Inc. (USD) 4.125% 7/25/2028 made analysts' 'Conviction Buy' lists. (See the chart for ADI indexes above.) Corey Mahoney (
Key Gainers and Losers Volume Leaders
+   Dowdupont Inc. 5.419% 11/15/2048 + 0.1%
  Bank of Montreal 1.75% 9/11/2019 + 0.1%
-   CVS Health Corp. 5.05% 3/25/2048 -0.4%
Suzano Austria GmbH   7% 3/16/2047 Reg S
Vistra Operations Co. LLC   4.3% 7/15/2029 144A
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.18% 0.66% 2.03% 4.31% 6.76% 5.08%
Mining -0.19% 0.37% 0.95% 3.64% 7.28% 6.84%
Construction -0.20% 0.71% 1.79% 4.01% 5.20% 6.10%
Manufacturing -0.15% 0.67% 1.46% 3.92% 6.01% 6.41%
Transportion, Communication, Electric/Gas -0.29% 0.78% 1.79% 5.09% 7.60% 8.99%
Wholesale -0.18% 0.42% 1.22% 3.70% 6.67% 6.52%
Retail -0.33% 0.67% 1.54% 4.03% 6.22% 6.65%
Finance, Insurance, Real-Estate -0.14% 0.54% 1.39% 3.37% 5.56% 6.90%
Services -0.24% 0.79% 1.84% 4.04% 6.15% 7.53%
Public Administration -0.15% 0.50% 1.16% 2.41% 2.77% 4.69%
Energy -0.27% 0.38% 1.02% 3.84% 7.56% 8.73%
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-06-05T171914.319

New Issues New Issues [Continued]

1. John Deere Capital Corp. (USD) 2.6% 3/7/2024 (06/04/2019):600MM Senior Unsecured Notes, Price at Issuance 99.829, Yielding 2.64%.

2. John Deere Capital Corp. (USD) FLT% 6/7/2021 (06/04/2019):400MM Senior Unsecured Notes, Price at Issuance 100.


Additional Commentary

NEW ISSUANCE WATCH: on 6/5/19 participants welcome a $800MM new corporate-bond offering by Vistra Operations Co LLC. 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)
Hertz Corp. (5Y Sen USD XR14)
Hovnanian Enterprises Inc. (5Y Sen USD MR14)
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:
  • Packers Holdings, 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 14 bp (basis points), as of 06/05/19
  • Net positive capital flows into high-yield ETFs & mutual funds

Copyright 2019 Advantage Data Inc. All Rights Reserved.

Information in this document should not be regarded as an offer to sell or solicitation of an offer to buy bonds or any financial instruments referred to herein. All information provided in this document is believed to be accurate. However, Advantage Data and its sources make no warranties, either express or implied, as to any matter whatsoever, including but not limited to warranties of merchantability or fitness for a particular purpose. Opinions in this document are subject to change without notice. Electronic redistribution, photocopying and any other electronic or mechanical reproduction is strictly prohibited without prior written permission from Advantage Data Inc.

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

Are you using AdvantageData?

AdvantageData is your fixed income solution for pricing, analytics, reports, and insight on approximately:

  • 500,000+ U.S. and international corporate bonds
  • Over 6,200+ CDS reference entities
  • Over 22,000+ syndicated loans
  • Over 100 equity markets worldwide
  • One platform 16 products and services from debt to CDS to loans to mid-market
  • Used by top buy and sell-side firms worldwide

Subscribe to Email Updates

Recent Posts