Investment Grade Bond Research - May 29, 2019

Posted by Andrew Robartes on May 29, 2019 5:25:47 PM
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U.S. STOCKS DECLINED AGAIN WEDNESDAY as trade worries continued and more investors moved into government bonds. The Treasury yield curve has reached its deepest inversion since 2007, with the 3-month yield topping the 10-year by almost 10 basis points. Amidst the yield curve predicting economic downturn, all three major indices fell today. S&P -0.69%, DOW -0.87%, NASDAQ -0.79%. 

IN THE CORPORATE BOND SPACE, Choice Properties REIT priced $750 million worth of senior unsecured notes. The proceeds will be used in part to pay existing debts and for general corporate purposes. The notes bear an interest rate of 3.532% and will mature on June 11, 2029. Compared to the yields of Treasury Bonds, corporate bonds have been falling at a slower rate, indicating caution among investors. 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, San Diego Gas & Electric Co. (USD) 3.95% 11/15/2041 made analysts' 'Conviction Buy' lists. (See the chart for  San Diego Gas & Electric Co. (USD) 3.95% 11/15/2041below.) Andrew Robartes (
Key Gainers and Losers Volume Leaders
+   PNC Bank NA 2% 5/19/2020 + 0.0%
  IBM Corp. 1.625% 5/15/2020 + 0.2%
-   Apple Inc. 1.8% 5/11/2020 -0.1%
  AT&T Inc. 4.35% 6/15/2045 -0.2%
Citibank NA   3.05% 5/1/2020
Verizon Communications Inc.   4.862% 8/21/2046
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.19% 0.43% 0.84% 3.48% 5.94% 4.99%
Mining 0.12% 0.36% 0.21% 3.20% 6.71% 6.25%
Construction 0.21% 0.77% 0.96% 3.66% 5.31% 5.73%
Manufacturing 0.11% 0.49% 0.62% 3.10% 5.10% 5.70%
Transportion, Communication, Electric/Gas 0.16% 0.70% 0.89% 4.20% 6.56% 8.04%
Wholesale 0.06% 0.38% 0.74% 3.31% 6.11% 6.23%
Retail 0.09% 0.43% 0.66% 3.12% 5.30% 6.07%
Finance, Insurance, Real-Estate 0.09% 0.43% 0.73% 2.69% 4.74% 6.12%
Services 0.14% 0.55% 0.79% 3.11% 5.21% 6.68%
Public Administration 0.12% 0.35% 0.63% 1.86% 2.21% 4.27%
Energy 0.09% 0.44% 0.32% 3.35% 6.90% 8.13%
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-05-29T172438.699

New Issues New Issues [Continued]

1. Mastercard Inc. (USD) 3.65% 6/1/2049 (05/29/2019): 1000MM Senior Unsecured Notes, Price at Issuance 99.855, Yielding 3.66%.

2. Bank of America Corp. (USD) 3% 5/30/2024 (05/29/2019): 50MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3%.


Additional Commentary

NEW ISSUANCE WATCH: on 5/29/19 participants welcome a $300MM new corporate-bond offering by Southwest Gas Corp. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 5/24/19, with a net outflow of $4MM, year-to-date $11.0B 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)
SuperValu Inc. (5Y Sen USD XR14)
Atmos Energy Corp. (5Y Sen USD MR14)

unnamed - 2019-05-28T172415.939

Loans and Credit Market Overview


Deals recently freed for secondary trading, notable secondary activity:
  • Louis Dreyfus Corp., Service Corp. Intl., Lucid Energy Group LLC
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 18 bp (basis points), as of 05/29/19
  • 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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