JUNK BONDS PREVAILED AGAINST INVESTMENT-GRADE DEBT in net price gains linked to actual trades as a slight risk-on sentiment returns to the bond market. Investors are progressively becoming bullish on Treasuries as fewer investors are inclined to short Government bonds amid a surprise jump of weak economic data. Equities snapped a six-day win streak the, S&P slipped -0.01%, the Dow settled -0.09% lower, and the NASDAQ rose +0.12%. Gold ticked higher closing above $1,300 an ounce. The 10-year U.S. Treasury note rose 0.8 basis point.
Investment Grade Bond Research – March 19, 2019Posted on March 19, 2019
|Key Gainers and Losers||Volume Leaders|
|Verizon Communications Inc. FLT% 3/16/2022
|Industry Returns Tracker|
|New Issues||New Issues [Continued]|
|1. Target Corp. (USD) 3.375% 4/15/2029 (03/18/2019): 1000MM Senior Unsecured Notes, Price at Issuance 99.99, Yielding 3.38%.
2. Louisville Gas & Electric Co. (USD) 4.25% 4/1/2049 (03/18/2019):400MM First Lien Notes, Price at Issuance 99.882, Yielding 4.26%.
Target Corp. The most recent data showed money flowed out of high-yield ETFs/mutual funds for the week ended 3/15/19, with a net inflow of $1.0B, year-to-date $8.2B 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)
|Cable & Wireless Communication (5Y Sen USD CR14)
San Miguel Corp. (5Y Sen USD CR14)
Loans and Credit Market Overview
SYNDICATED LOANS HIGHLIGHTS:
Deals recently freed for secondary trading, notable secondary activity:
- TruGreen LP, PetVet Care Centers LLC, XPO Logistics Inc., MYOB LTD, Dell International
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 20 bp (basis points), as of 03/19/19
- Net positive capital flows into high-yield ETFs & mutual funds
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