Investment Grade Bond Research - May 10, 2019

Written by Andrew Robartes | May 10, 2019 9:15:16 PM

U.S. STOCKS RECOVERED SOME LOSSES FRIDAY despite trade talks with China failing to reach a deal. Of the three major indices, the tech-heavy NASDAQ produced the smallest gains as a result of its exposure to China, closing up 0.08%. 10-Year U.S. Treasury yields rose 2.5 basis points. S&P +0.37%, Dow +0.44%, NASDAQ +0.08%.

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UBER DISAPPOINTED IN TODAY’S HIGHLY anticipated initial public offering. The San Francisco-based ride service company closed at $41.57 per share, down from its IPO price of $45. Uber executives are confident the company will prevail despite volatility. In the corporate bond market, Bausch Health Companies Inc. priced $1.5B in senior unsecured notes. The company plans to use the proceeds to repurchase principal across their existing notes. Bausch Health reported strong results in Q1 and analysts foresee the potential for more growth. ADI proprietary index data showed a net yield increment for high-yield versus high-grade bonds. High-grade edged out high-yield. Among high-grade bonds showing topmost price gains at appreciable volumes traded, Apple Inc. (USD) 3.45% 2/9/2045 made analysts' 'Conviction Buy' lists. (See the chart for Apple Inc. (USD) 3.45% 2/9/2045 below.) Andrew Robartes (arobartes@advantagedata.com).

Key Gainers and Losers

Volume Leaders

+	GE Capital Intl. Funding Co. 4.418% 11/15/2035	+ 0.2%
	Ford Motor Co. 4.346% 12/8/2026	+ 0.2%
-	Deutsche Bank AG 2.95% 8/20/2020 (1)	-0.1%

CVS Health Corp. 5.05% 3/25/2048
Toyota Motor Credit Corp. VAR% 5/17/2022

Industry Returns Tracker

Industry	Past Day	Past Week	Past Month	Past Quarter	YTD	Past Year
Agriculture, Forestry, Fishing	-0.13%	0.83%	0.75%	2.90%	5.25%	4.74%
Mining	-0.05%	0.08%	0.29%	2.77%	5.91%	6.43%
Construction	0.09%	0.35%	0.83%	2.88%	4.54%	5.65%
Manufacturing	0.00%	0.20%	0.50%	2.35%	4.62%	5.57%
Transportion, Communication, Electric/Gas	0.05%	0.31%	0.79%	3.37%	5.90%	7.97%
Wholesale	-0.05%	0.16%	0.72%	2.72%	5.57%	6.12%
Retail	0.05%	0.22%	0.46%	2.32%	4.73%	6.18%
Finance, Insurance, Real-Estate	0.07%	0.25%	0.55%	2.24%	4.15%	5.98%
Services	0.01%	0.26%	0.42%	2.19%	4.31%	6.50%
Public Administration	0.09%	0.31%	0.47%	1.23%	1.69%	4.11%
Energy	-0.04%	0.09%	0.29%	2.92%	6.27%	8.37%

Total returns (non-annualized) by rating, market weighted.

New Issues	New Issues [Continued]
1. Omers Finance Trust (CAD) 2.6% 5/14/2029 144A (05/09/2019):1000MM Senior Unsecured Notes, Price at Issuance 99.895, Yielding 2.61%. 2. IBM Corp. (USD) 3.5% 5/15/2029 (05/09/2019): 3250MM Senior Unsecured Notes, Price at Issuance 99.749, Yielding 3.53%.

New Issues

New Issues [Continued]

1. Omers Finance Trust (CAD) 2.6% 5/14/2029 144A (05/09/2019):1000MM Senior Unsecured Notes, Price at Issuance 99.895, Yielding 2.61%.

2. IBM Corp. (USD) 3.5% 5/15/2029 (05/09/2019): 3250MM Senior Unsecured Notes, Price at Issuance 99.749, Yielding 3.53%.

Additional Commentary

NEW ISSUANCE WATCH: on 5/10/19 participants welcome a $500MM new corporate-bond offering by O'Reilly Automotive Inc. The most recent data showed money flowed into high-yield ETFs/mutual funds for the week ended 5/03/19, with a net inflow of $21.3MM, year-to-date $13.9B 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)	San Miguel Corp. (5Y Sen USD CR14) Atmos Energy Corp. (5Y Sen USD MR14)

Loans and Credit Market Overview

SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, notable secondary activity:

Hargray Communications Group Inc., Rikshem AB, Broadcom LTD, Verifone Inc.

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 12 bp (basis points), as of 05/10/19
Net positive capital flows into high-yield ETFs & mutual funds

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