High Yield Bond Research – April 25, 2019

JOBLESS CLAIMS SPIKE by 37,000 soaring past 200,000 hitting a two-and-half month high, economists attribute the Easter, Passover and spring break for the rise. Despite the uptick, in unemployment applications, the economy remains sounds. “Company CEOs may have feared recession in surveys taken at the start of the year, but those concerns have faded” said Chris Rupkey, chief economist at MUFG in New York. The 10-year note rose 0.8 basis points. S&P +0.13%, DOW -0.32%, NASDAQ+0.37%

U.S. DURABLE GOODS ORDERS JUMPED 2.7 PERCENT in March, exceeding expectations of a 0.8 percent increase.  Orders grew at the fastest rate in seven-months aided by strong demand for autos and planes, orders for commercial aircraft spiked 30 percent alone.  “A strong increase in core capital goods orders is a positive sign for rising business investment into the second quarter, consistent with our view that 2019 will be another year of solid activity,” stated Andrew Hollenhorst, an economist of Citibank.  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,   Ford Motor Co. (USD) 4.75% 1/15/2043 made analysts’ ‘Conviction Buy’ lists. (See the chart for ADI Indexes above.) Corey Mahoney cmahoney@advantagedata.com).

Key Gainers and Losers	Volume Leaders
+   Entercom Radio LLC 6.5% 5/1/2027 144A + 0.2%   Cengage Learning 9.5% 6/15/2024 144A + 9.1% –   Sabine Pass Liquefaction LLC 5.625% 2/1/2021 (1) -0.0%	Petrobras Global Finance BV   6.85% 6/5/2115 VRX Escrow Corp.   6.125% 4/15/2025 144A

Industry Returns Tracker

Industry Past Day Past Week Past Month Past Quarter YTD Past Year Agriculture, Forestry, Fishing 0.14% -0.01% 0.50% 5.49% 8.69% 7.89% Mining 0.13% 0.32% 2.59% 4.98% 10.24% 4.56% Construction 0.05% 0.04% 2.09% 5.60% 8.34% 5.60% Manufacturing 0.12% 0.09% 1.35% 4.57% 7.58% 6.51% Transportion, Communication, Electric/Gas 0.06% 0.01% 1.61% 5.39% 7.54% 6.84% Wholesale 0.19% 0.11% 1.39% 4.60% 7.97% 4.99% Retail 0.14% 0.09% 2.53% 6.27% 10.03% 7.94% Finance, Insurance, Real-Estate 0.10% 0.14% 1.12% 4.34% 7.41% 6.45% Services 0.09% 0.11% 1.23% 4.00% 7.28% 7.02% Public Administration 0.02% 0.33% 0.43% 3.20% 6.30% 10.20% Energy 0.15% 0.29% 2.46% 4.96% 9.77% 4.18%   Total returns (non-annualized) by rating, market weighted.

New Issues	Forward Calendar
1. Entercom Radio LLC (USD) 6.5% 5/1/2027 Reg S (04/24/2019):325MM Second Lien Notes, Price at Issuance 100, Yielding 6.5%. 2. Adient US LLC (USD) 7% 5/15/2026 Reg S (04/25/2019): 800MM Secured Notes, Price at Issuance 100, Yielding 7%.	1. Twin River Management Group Inc.: $350M bonds, Expected Q2 2019 2. General Electric Distributed Power: $600M high-yield bonds, Expected Q2 2019

NEW ISSUANCE WATCH: on 4/25/19 participants welcome a $800MM new corporate-bond offering by
Adient US LLC.  The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 4/18/19, with a net inflow of $1.1B, year-to-date $14.4B 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:

• Sundyne US Purchaser, Prysmian, Project Maple II BV, Trade Me Group LTD, Jane Street

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 04/25/19
• Net positive capital flows into high-yield ETFs & mutual funds

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