Investment Grade Bond Research - September 13, 2019

Posted by Corey Mahoney on Sep 13, 2019 5:07:07 PM

FANNIE AND FREDDIE MAC REVISED THEIR LENDING LIMITS on multi-family mortgages to $359 billion from $339 billion in 2018. These new multifamily caps eliminate loopholes, provide ample support for the market without crowding out private capital.” The 10-year note spiked 12.4 basis points. S&P -0.16%, DOW +0.12, NASDAQ -0.28%.

PACIFIC GAS & ELECTRIC REACHED AN $11 BILLION SETTLEMENT with insurance companies relating to the deadly wildfires representing 85 percent of the insurance claims. “PG&E is taking money out of the pockets of people whose homes and businesses it burned down and handing the money to insurance companies to buy their cooperation.” PG&E remains under pressure and scrutiny as it emerges from chapter 11 bankruptcy. ADI proprietary index data showed a net yield increment for high-grade versus high-yield bondsHigh-yield edged out high-grade. Among high-yield bonds showing topmost price gains at appreciable volumes traded,  Pacific Gas & Electric Co. (USD) 3.75% 8/15/2042 made analysts' 'Conviction Buy' list (See the chart above for ADI bonds above) Corey Mahoney
Key Gainers and Losers Volume Leaders
+   Bank of Nova Scotia 4.65% PERP + 0.3%
  WestPac Banking Corp. 4.875% 11/19/2019 + 0.0%
-   CVS Health Corp. 5.05% 3/25/2048 -1.4%
CVS Health Corp.   4.3% 3/25/2028
GE Capital Intl. Funding Co.   4.418% 11/15/2035
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.14% -0.78% -0.31% 1.16% 9.27% 9.19%
Mining -0.16% -1.08% -0.10% 3.74% 11.37% 10.56%
Construction -0.21% -1.08% -0.51% 3.35% 8.87% 8.91%
Manufacturing -0.16% -0.99% -0.04% 3.96% 10.02% 9.57%
Transportion, Communication, Electric/Gas -0.23% -1.42% -0.54% 4.86% 12.67% 12.34%
Wholesale -0.06% -0.72% 0.35% 3.56% 11.02% 9.82%
Retail -0.20% -1.10% -0.10% 4.60% 11.26% 10.95%
Finance, Insurance, Real-Estate -0.13% -0.78% -0.09% 2.81% 8.48% 9.16%
Services -0.21% -1.10% -0.17% 3.68% 9.74% 10.04%
Public Administration -0.05% -0.32% 0.11% 1.43% 4.45% 5.94%
Energy -0.17% -1.11% -0.24% 3.72% 11.44% 10.33%
Total returns (non-annualized) by rating, market weighted.

unnamed - 2019-09-13T170128.182

New Issues New Issues [Continued]

1. Kraft Heinz Co (USD) 4.875% 10/1/2049 Reg S (09/12/2019): 1500MM Senior Unsecured Notes, Price at Issuance 98.571, Yielding 4.97%.

2. Alabama Power Co. (USD) 3.45% 10/1/2049 (09/12/2019): 600MM Senior Unsecured Notes, Price at Issuance 99.665, Yielding 3.47%.


Additional Commentary

NEW ISSUANCE WATCH: on 09/13/19 participants welcome a $400M new corporate-bond offering by
Protective Life Corp. The most recent data showed a significant flow into fixed income ETFs for the month of August, with a net inflow of $14.0 billion.
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)
Cable & Wireless Communication (5Y Sen USD CR14)
SuperValu Inc. (5Y Sen USD MR14)

unnamed - 2019-09-09T165404.526

Loans and Credit Market Overview


Deals recently freed for secondary trading, notable secondary activity:
  • YRC Worldwide Inc., Busy Bees Group LTD, Beazer Homes USA Inc, Murphy Oil USA Inc. 
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 09/13/19
  • 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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