Investment Grade Bond Research - May 13, 2019

STOCKS PLUMMETED MONDAY MORNING as China retaliated with movements to raise tariffs on $60 billion worth of U.S. goods. Starting June 1, Chinese officials say tariffs will be raised to as high as 25%on products that currently face levies of 5-10%. All three major indices dropped at least 2% amid the continued trade tensions, with the NASDAQ falling 3.41%. Crude Oil was down 1.3%. S&P -2.41%, Dow-2.38%, NASDAQ -3.41%.

INCREASED DEMAND FOR SAFER ASSETS caused a large dip in 10-Year U.S. Treasury yields, which sank 6.3 basis points to 2.405%. Treasury Yields, which have been falling since trade tensions with China escalated last week, are at their lowest since March. With respect to the U.S.-China trade uncertainty, Ian Lyngen, head of U.S. government bond strategy says “Regardless of the motive, its effect has been nervousness in the equity market and a flight-to-quality in Treasurys”. At this point, there is a focus on what China will do with U.S. government debt, and whether movement in the value of the yuan will effect this. 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, Prudential Financial Inc (USD) 6.625% 12/1/2037 made analysts' 'Conviction Buy' lists. (See the chart for  Prudential Financial Inc (USD) 6.625% 12/1/2037 below.) Andrew Robartes (arobartes@advantagedata.com).

Key Gainers and Losers	Volume Leaders
+   Comcast Corp. 4.15% 10/15/2028 + 0.2%   Apple Inc. 3.45% 5/6/2024 + 0.4% -   Microsoft Corp. 3.7% 8/8/2046 -0.0%	Comcast Corp.   4.15% 10/15/2028 Vodafone Group PLC   5.25% 5/30/2048

Industry Returns Tracker

Industry Past Day Past Week Past Month Past Quarter YTD Past Year Agriculture, Forestry, Fishing 0.30% 1.09% 1.42% 3.22% 5.59% 4.74% Mining -0.01% 0.01% 0.16% 2.69% 5.87% 6.07% Construction -0.03% 0.30% 0.69% 2.65% 3.95% 5.71% Manufacturing -0.02% 0.10% 0.38% 2.31% 4.54% 5.44% Transportion, Communication, Electric/Gas -0.03% 0.16% 0.62% 3.33% 5.87% 7.71% Wholesale 0.01% 0.12% 0.61% 2.73% 5.56% 5.89% Retail -0.08% 0.06% 0.25% 2.21% 4.64% 5.83% Finance, Insurance, Real-Estate -0.03% 0.15% 0.45% 2.19% 4.09% 5.84% Services -0.03% 0.15% 0.22% 2.12% 4.27% 6.20% Public Administration -0.00% 0.13% 0.38% 1.21% 1.68% 4.06% Energy -0.05% -0.03% 0.15% 2.83% 6.20% 8.00%   Total returns (non-annualized) by rating, market weighted.

New Issues	New Issues [Continued]
1. Rsse Stephens Properties Limited Partnership (USD) FLT% 5/1/2029 (05/13/2019): 175MM Secured Notes, Price at Issuance 100.

NEW ISSUANCE WATCH: on 5/13/19 participants welcome a $175MM new corporate-bond offering by RSSE Stephens Properties Limited Partnership. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 5/10/19, with a net outflow of $212MM, year-to-date $13.6B 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 XR14)	Road King Infrastructure LTD (5Y Sen USD MR14) Cable & Wireless Communication (5Y Sen USD CR14)

Loans and Credit Market Overview

SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, notable secondary activity:

• Oryx Midstream, Hargray Communications Group Inc., Rikshem AB, Broadcom LTD

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 11 bp (basis points), as of 05/13/19
• Net positive capital flows into high-yield ETFs & mutual funds

Copyright 2019 Advantage Data Inc. All Rights Reserved. http://www.advantagedata.com

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.