US STOCKS FELL SLIGHTLY TODAY amid European headlines regarding Brexit. Additionally, McDonald’s missed earnings expectations in a mixed third quarter and saw shares dip 5%. The 10-year Treasury note declined 3.7 bps. S&P -0.36%, DOW -0.15%, NASDAQ -0.72%
IN THE CORPORATE BOND SPACE, Netflix, Inc. (NFLX) priced $2 billion worth of senior unsecured notes due in 2030. The American streaming service will use the proceeds from these junk-rated bonds to finance new content, and potential acquisitions. ADI proprietary index data showed a net yield increment for high-grade versus high-yield bonds. High-grade edged out high-yield. Among high-grade bonds showing topmost price gains at appreciable volumes traded, Ford Motor Co. (USD) 4.346% 12/8/2026 made analysts' 'Conviction Buy' list. (See the chart above for Ford Motor Co. below) Andrew Robartes
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Molson Coors Brewing Co. 4.2% 7/15/2046 Southern Copper Corp. 3.875% 4/23/2025 |
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| New Issues | New Issues [Continued] |
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1. Royal Bank of Canada (USD) 2.25% 11/1/2024 (10/21/2019): 1500MM Senior Unsecured Notes, Price at Issuance 99.778, Yielding 2.3%. 2. Delta Airlines (USD) 3.75% 10/28/2029 (10/21/2019): 600MM Senior Unsecured Notes, Price at Issuance 99.595, Yielding 3.8%. |
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Additional Commentary
United Rentals Inc. The most recent data showed a money flowed out of highyoutflow ETF/mutual funds for the week ended 9/27/2019, with a net outflow of $258 million.
| Top Widening Credit Default Swaps (CDS) | Top Narrowing Credit Default Swaps (CDS) |
| Rite Aid Corp. (5Y Sen USD XR14) Weatherford International LTD (5Y Sen USD MR14) |
Cable & Wireless Communication (5Y Sen USD CR14) SuperValu Inc. (5Y Sen USD MR14) |
Loans and Credit Market Overview
Deals recently freed for secondary trading, notable secondary activity:
- McDermott International Inc., Live Nation Entertainment Inc., Berry Plastics Corp.
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 28bp (basis points), as of 10/22/19
- Net positive capital flows into high-yield ETFs & mutual funds
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