Investment Grade Bond Research - May 15, 2019

Posted by Andrew Robartes on May 15, 2019 5:06:36 PM
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U.S. STOCKS RECOVERED LOSSES WEDNESDAY after news broke that the White House plans to delay an auto tariffs decision by up to six months. The news was well received in the equities market, which has been turbulent for the better part of the last two weeks. The technology sector performed particularly well today as the NASDAQ rose 1.13%. 10-Year U.S. Treasury Yields fell 3.4 basis points. S&P +0.58%, Dow +0.45%, NASDAQ +1.13%.

IN THE CORPORATE BOND SPACE, Waste Management Inc. recently priced $4 billion worth of senior unsecured notes. Waste Management plans to use the proceeds to partially fund the acquisition of Advanced Disposal Services Inc. The notes received ratings of Baa1 and A- by Moody’s and Standard & Poor’s respectively. North America’s leading provider of comprehensive waste management environmental services also recently announced a quarterly cash dividend to shareholders payable June 21, 2019. 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,  General Motors Co. (USD) 6.75% 4/1/2046 made analysts' 'Conviction Buy' lists. (See the chart for General Motors Co. (USD) 6.75% 4/1/2046 below.) Andrew Robartes (
Key Gainers and Losers Volume Leaders
+   Comcast Corp. 4.15% 10/15/2028 + 0.5%
  Mylan Inc. 3.95% 6/15/2026 + 1.1%
-   Campbell Soup Co. 4.8% 3/15/2048 -0.5%
JPMorgan Chase & Co.   2.55% 10/29/2020
Comcast Corp.   4.15% 10/15/2028
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.20% 0.29% 0.80% 2.71% 5.21% 4.79%
Mining -0.05% -0.30% 0.09% 2.90% 6.06% 6.05%
Construction -0.02% -0.03% 0.95% 2.80% 4.52% 5.58%
Manufacturing -0.05% -0.08% 0.52% 2.52% 4.63% 5.36%
Transportion, Communication, Electric/Gas -0.03% -0.26% 0.73% 3.52% 6.01% 7.15%
Wholesale -0.04% -0.11% 0.74% 2.95% 5.61% 6.05%
Retail -0.08% -0.08% 0.48% 2.44% 4.74% 5.92%
Finance, Insurance, Real-Estate -0.04% 0.06% 0.68% 2.38% 4.28% 5.96%
Services -0.02% -0.09% 0.48% 2.38% 4.51% 6.22%
Public Administration -0.03% 0.26% 0.81% 1.55% 1.89% 4.25%
Energy -0.06% -0.37% 0.06% 2.97% 6.23% 6.53%
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-05-15T170510.813

New Issues New Issues [Continued]

1. Waste Management Inc. (USD) 2.95% 6/15/2024 (05/14/2019):750MM Senior Unsecured Notes, Price at Issuance 99.994, Yielding 2.95%.


Additional Commentary

NEW ISSUANCE WATCH: on 5/15/19 participants welcome a $1.5B new corporate-bond offering by Wells Fargo Bank NA. 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 MR14)
Hertz Corp. (5Y Sen USD XR14)
SuperValu Inc. (5Y Sen USD XR14)
Atmos Energy Corp. (5Y Sen USD MR14)

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Loans and Credit Market Overview


Deals recently freed for secondary trading, notable secondary activity:
  • Medallion Midland Acquisition, Eldorado Gold Corp., Oryx Midstream
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 05/15/19
  • 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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