Investment Grade Bond Research - May 17, 2019

Posted by Andrew Robartes on May 17, 2019 5:21:00 PM
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U.S. STOCKS RECOVERED EARLY LOSSES on Friday as positive economic data weighs against trade concerns. News that China is hesitant to resume trade talks with the U.S. reinforced investors' concerns that tensions will persist. However, news that consumer sentiment is at a 15-year high bolstered stocks and stabilized U.S. treasury yields, with the 10-Year Note at 2.39%. S&P -0.58%, Dow -0.38%, NASDAQ -1.04%.

IN THE CORPORATE BOND MARKET, Dow Chemical Co., a wholly owned subsidiary of Dow Inc., priced $2 billion in senior unsecured notes. The commodity chemical company intends to use the proceeds to repay indebtedness and redeem existing notes. President of Dow, Howard Ungerleider said “The current interest rate environment provides us with a window to opportunistically manage and extend our debt maturity profile”. The bonds were given a rating of BBB by Standard and Poor’s. 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, Charles Schwab Corp. (USD) 3.2% 1/25/2028 made analysts' 'Conviction Buy' lists. (See the chart for Charles Schwab Corp. (USD) 3.2% 1/25/2028 below.) Andrew Robartes (
Key Gainers and Losers Volume Leaders
+   Apple Inc. 2.85% 5/11/2024 + 0.1%
  Citigroup Inc. FLT% 1/10/2020 + 0.0%
-   Best Buy Co. Inc. 4.45% 10/1/2028 -0.1%
Apple Inc.   2.85% 5/11/2024
Citigroup Inc.   FLT% 1/10/2020
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.53% -0.10% 0.69% 2.86% 5.21% 4.85%
Mining -0.05% 0.12% 0.36% 2.88% 6.17% 6.81%
Construction -0.15% 0.09% 0.94% 2.76% 4.56% 6.01%
Manufacturing -0.07% 0.20% 0.77% 2.58% 4.77% 5.97%
Transportion, Communication, Electric/Gas -0.07% 0.09% 0.98% 3.50% 6.11% 8.53%
Wholesale -0.05% 0.18% 0.81% 2.91% 5.74% 6.76%
Retail -0.08% 0.19% 0.77% 2.57% 5.00% 6.65%
Finance, Insurance, Real-Estate -0.09% 0.16% 0.83% 2.42% 4.40% 6.47%
Services -0.09% 0.19% 0.68% 2.47% 4.57% 6.93%
Public Administration -0.12% 0.21% 0.79% 1.51% 1.89% 4.34%
Energy -0.04% 0.03% 0.39% 2.96% 6.32% 8.60%
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-05-17T171852.855

New Issues New Issues [Continued]

1. Air Lease Corp. (USD) 3.75% 6/1/2026 (05/16/2019): 750MM Senior Unsecured Notes, Price at Issuance 98.85, Yielding 3.94%.

2. Dow Chemical Co. (USD) 4.8% 5/15/2049 144A (05/17/2019):750MM Senior Unsecured Notes, Price at Issuance 99.403, Yielding 4.84%.


Additional Commentary

NEW ISSUANCE WATCH: on 5/17/19 participants welcome a $750M new corporate-bond offering by Dow Chemical Co. 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 CR14)
SuperValu Inc. (5Y Sen USD XR14)
Atmos Energy Corp. (5Y Sen USD MR14)

think.advantagedata.comhubfsunnamed (95)-1

Loans and Credit Market Overview


Deals recently freed for secondary trading, notable secondary activity:
  • Horizon Pharma Inc., PCI GAMING AUTHORITY, Medallion Midland Acquisition
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 05/17/19
  • 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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