Advantage Data High Yield Bond Market Summary

HIGH-YIELD DEBT RETAINED AN EDGE AGAINST INVESTMENT GRADE BONDS in net prices linked to actual trades. Muted signs of inflation have agitated bond investors to be the most bullish on longer-dated U.S. Treasuries since 2016. The Fed’s preferred method of evaluating inflation, the rate of Personal consumption expenditure increased by 1.7 percent on a year-over-year basis. The 10-year note lost 2.3 basis points. S&P -0.01%, DOW +0.08%, NASDAQ -0.75%.

PENDING HOME SALES CLIMBED 3.8 PERCENT IN MARCH surpassing estimates of 0.7 percent rising to an eight-month high.   G-component   Alphabet  of the   FAANG  group   tumbled 8 percent  after reporting disappointing sales growth   erasing $60 billion off its market cap.  Ad revenue dipped nearly 5 percent quarter-over-quarter and only grew 15 percent year-over-year.   “ People are definitely taking some profits off names like Apple, Google. There could be a little ‘peaking’ mentality here considering how indexes are at record levels”.  ADI proprietary index data showed a net  yield increment for high-yield versus high-grade bonds.   High-yield edged out high-grade. Among high-yield bonds showing topmost price gains at appreciable volumes traded,    Transocean Inc. (USD) 9% 7/15/2023 144A  made analysts' 'Conviction Buy' lists. (See the chart for    ADI Indexes above)  Corey Mahoney  cmahoney@advantagedata.com).

 

Key Gainers and Losers	Volume Leaders
+   Comcast Corp. 4.15% 10/15/2028 + 0.1%   CVS Health Corp. 4.1% 3/25/2025 + 0.2% -   Ford Motor Co. 4.75% 1/15/2043 -0.1%	Home Depot Inc.   3.75% 2/15/2024 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 -0.02% 0.34% 0.43% 3.95% 4.89% 4.68% Mining -0.16% 0.22% 0.32% 3.89% 6.00% 6.10% Construction -0.12% 0.34% 0.39% 3.38% 3.82% 5.23% Manufacturing -0.17% 0.35% 0.21% 3.19% 4.44% 5.11% Transportion, Communication, Electric/Gas -0.16% 0.34% 0.32% 4.36% 5.64% 6.64% Wholesale -0.14% 0.31% 0.38% 3.56% 5.22% 5.40% Retail -0.14% 0.30% 0.02% 3.08% 4.33% 5.54% Finance, Insurance, Real-Estate -0.09% 0.30% 0.22% 2.73% 3.84% 5.55% Services -0.17% 0.34% -0.02% 2.87% 4.10% 5.87% Public Administration -0.05% 0.17% 0.08% 1.04% 1.13% 3.54% Energy -0.17% 0.27% 0.24% 4.11% 6.18% 6.49%   Total returns (non-annualized) by rating, market weighted.

New Issues	New Issues [Continued]
1. Lear Corp. (USD) 4.25% 5/15/2029 (04/29/2019): 375MM Senior Unsecured Notes, Price at Issuance 99.691, Yielding 4.29%. 2. Norfolk Southern Corp. (USD) 4.1% 5/15/2049 (04/29/2019):400MM Senior Unsecured Notes, Price at Issuance 99.264, Yielding 4.14%.

NEW ISSUANCE WATCH: on 4/30/19 participants welcome a $300MM new corporate-bond offering by
Textron Inc.   The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 4/26/19, with a net outflow of $0.520B, year-to-date $13.8B 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 MR14) Atmos Energy Corp. (5Y Sen USD MR14)

Loans and Credit Market Overview

SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, notable secondary activity:

• JBS USA LLC, Sundyne US Purchaser, Prysmian, Project Maple II BV, Trade Me Group LTD

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 17 bp (basis points), as of 04/30/19
• Net positive capital flows into high-yield ETFs & mutual funds

Copyright 2019 Advantage Data Inc. All Rights Reserved. http://www.advantagedata.com

Information in this document should not be regarded as an offer to sell or solicitation of an offer to buy bonds or any financial instruments referred to herein. All information provided in this document is believed to be accurate. However, Advantage Data and its sources make no warranties, either express or implied, as to any matter whatsoever, including but not limited to warranties of merchantability or fitness for a particular purpose. Opinions in this document are subject to change without notice. Electronic redistribution, photocopying and any other electronic or mechanical reproduction is strictly prohibited without prior written permission from Advantage Data Inc.

HIGH-YIELD DEBT RETAINED AN EDGE AGAINST INVESTMENT GRADE BONDS  in net prices linked to actual trades.  Muted signs of inflation have   agitated bond investors  to be the most bullish on longer-dated U.S. Treasuries since 2016. The Fed’s preferred method of evaluating inflation, the rate of  Personal consumption expenditure increased by 1.7 percent  on a year-over-year basis .  The 10-year note lost 2.3 basis points . S&P  -0.01%,   DOW  +0.08%,   NASDAQ  -0.75%.

 

PENDING HOME SALES CLIMBED 3.8 PERCENT IN MARCH surpassing estimates of 0.7 percent rising to an eight-month high.   G-component   Alphabet  of the   FAANG  group   tumbled 8 percent  after reporting disappointing sales growth   erasing $60 billion off its market cap.  Ad revenue dipped nearly 5 percent quarter-over-quarter and only grew 15 percent year-over-year.   “ People are definitely taking some profits off names like Apple, Google. There could be a little ‘peaking’ mentality here considering how indexes are at record levels”.   ADI proprietary index data showed a net  yield increment for high-yield versus high-grade bonds.  High-yield edged out high-grade. Among high-yield bonds showing topmost price gains at appreciable volumes traded,    Transocean Inc. (USD) 9% 7/15/2023 144A made analysts' 'Conviction Buy' lists. (See the chart for  Transocean Inc. bonds below.)  Corey Mahoney  cmahoney@advantagedata.com).

 

Key Gainers and Losers	Volume Leaders
+   Charter Communications Operating LLC 5.75% 4/1/2048 + 0.8%   Broadcom Corp. 3.5% 1/15/2028 + 0.4% -   Dish DBS Corp. 7.75% 7/1/2026 -0.3%	HCA Inc.   4.5% 2/15/2027 Petrobras Global Finance BV   7.375% 1/17/2027

Industry Returns Tracker

Industry Past Day Past Week Past Month Past Quarter YTD Past Year Agriculture, Forestry, Fishing 0.02% -0.13% 0.60% 4.71% 7.30% 6.87% Mining -0.10% -0.09% 1.64% 4.03% 9.32% 4.04% Construction -0.05% 0.15% 1.54% 5.42% 8.34% 5.73% Manufacturing -0.04% 0.26% 1.19% 4.70% 7.88% 6.65% Transportion, Communication, Electric/Gas 0.01% 0.29% 1.37% 5.39% 7.83% 6.94% Wholesale 0.07% 0.25% 1.09% 4.13% 7.76% 5.05% Retail 0.05% 0.52% 1.78% 4.99% 8.53% 5.22% Finance, Insurance, Real-Estate -0.04% 0.22% 0.96% 4.36% 7.67% 6.81% Services -0.01% 0.27% 1.05% 4.21% 7.98% 7.35% Public Administration 0.02% 0.23% 0.43% 2.98% 6.17% 10.08% Energy -0.15% 0.00% 1.65% 4.27% 9.17% 3.45%   Total returns (non-annualized) by rating, market weighted.

New Issues	Forward Calendar
1. Moss Creek Resources LLC (USD) 10.5% 5/15/2027 144A (04/29/2019): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 10.5%.	1. Twin River Management Group Inc.: $350M bonds, Expected Q2 2019 2. Twinset Spa: ¬170M 5 year senior secured floating-rate notes, Expected Q2 2019

NEW ISSUANCE WATCH: on 4/29/19 participants welcome a $500MM new corporate-bond offering by
Moss Creek Resources LLC.   The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 4/26/19, with a net outflow of $0.520B, year-to-date $13.8B 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)	Cable & Wireless Communication (5Y Sen USD CR14) SuperValu Inc. (5Y Sen USD MR14)

Loans and Credit Market Overview

SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading,  notable secondary activity: 

• JBS USA LLC, Sundyne US Purchaser, Prysmian, Project Maple II BV, Trade Me Group LTD

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 17 bp (basis points), as of 04/30/19
• Net positive capital flows into high-yield ETFs & mutual funds 

Copyright 2019 Advantage Data Inc. All Rights Reserved. http://www.advantagedata.com

Information in this document should not be regarded as an offer to sell or solicitation of an offer to buy bonds or any financial instruments referred to herein. All information provided in this document is believed to be accurate. However, Advantage Data and its sources make no warranties, either express or implied, as to any matter whatsoever, including but not limited to warranties of merchantability or fitness for a particular purpose. Opinions in this document are subject to change without notice. Electronic redistribution, photocopying and any other electronic or mechanical reproduction is strictly prohibited without prior written permission from Advantage Data Inc.