Grid IconAll Posts Market Summaries

Investment Grade Bond Research – April 30, 2019

Posted on April 30, 2019

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
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.

unnamed - 2019-04-30T173036.747

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%.

Additional Commentary

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)

unnamed (95)

Loans and Credit Market Overview


Deals recently freed for secondary trading, notable secondary activity:

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

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.

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.

Are you using AdvantageData?

AdvantageData is your fixed income solution for pricing, analytics, reports, and insight on approximately:

  • 500,000+ U.S. and international corporate bonds
  • Over 300,000+ BDC fair value assessments dating back to 2000
  • Over 22,000+ syndicated loans
  • Over 100 equity markets worldwide
  • One platform 15 products and services from debt to loans to mid-market
  • Used by top buy and sell-side firms worldwide


facebook share icon twitter share icon linkedin share icon
Ready to get Started? Free Trial