North American Bond Research – December 10, 2019

STOCKS FELL DUE AGAIN TO THE FEAR THAT TARIFFS WILL BE LEVIED ON DECEMBER 15TH. The US and China are both hinting that no tariffs will be levied and that in fact some tariffs may be rescinded. The 10-year note lost 1.3 basis points. S&P -0.11%, Dow -0.10%, NASDAQ -0.07%.

Key Gainers and Losers	Volume Leaders
+   Cortes NP Acquisition Corp. 9.25% 10/15/2024 144A + 4.1%   Teva Pharmaceutical Industries LTD 2.8% 7/21/2023 + 0.1%   Petrobras Global Finance BV 6.85% 6/5/2115 + 0.1% –   GFL Environmental Inc. 7% 6/1/2026 144A -0.0%   Constellation Brands Inc. 4.75% 12/1/2025 -0.4%   Western Digital Corp. 4.75% 2/15/2026 -0.0%	GFL Environmental Inc.   5.125% 12/15/2026 144A CenturyLink Inc.   5.125% 12/15/2026 144A Amsted Industries Inc.   4.625% 5/15/2030 144A

Industry Returns Tracker

Industry Past Day Past Week Past Month Past Quarter YTD Past Year Agriculture, Forestry, Fishing 0.18% 0.81% 0.73% 2.10% 17.76% 18.09% Mining 0.18% 0.91% 0.16% -1.66% 6.05% 3.49% Construction 0.07% 0.40% 0.90% 2.26% 16.26% 15.68% Manufacturing 0.11% 0.49% 1.22% 2.40% 12.48% 11.27% Transportion, Communication, Electric/Gas 0.09% 0.31% 0.35% 0.76% 13.35% 11.99% Wholesale 0.16% 0.43% 0.22% 0.34% 11.84% 10.44% Retail 0.07% 0.36% 0.38% 1.07% 15.79% 13.67% Finance, Insurance, Real-Estate 0.07% 0.31% 0.73% 1.58% 13.63% 12.55% Services 0.06% 0.38% 0.83% 1.69% 13.39% 12.18% Public Administration 0.22% 0.22% 0.75% 1.65% 14.60% 15.92% Energy 0.21% 0.90% 0.20% -1.87% 6.22% 4.08%   Total returns (non-annualized) by rating, market weighted.

New Issues	Forward Calendar
1. Amsted Industries Inc. (USD) 4.625% 5/15/2030 144A (12/09/2019): 400MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.63%. 2. CenturyLink Inc. (USD) 5.125% 12/15/2026 144A (12/09/2019): 1250MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.13%. 3. EnerSys (USD) 4.375% 12/15/2027 144A (12/09/2019): 300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.38%.	1. Qmax Financial Holdings Inc.: $225MM, Expected 4th Quarter 2019 2. Calpine Corp.: $1.4B bonds, Expected Q4 2019 3. Diamondback Energy Inc.: High-yield notes, Expected Q4 2019

NEW ISSUANCE WATCH: on 11/14/19 participants welcome a $1175MM new corporate-bond offering by
Wolverine Ecrow The most recent data showed a money flowed out of ETF/mutual funds for the week ended 11/15/2019, with a net outflow of $240 Million.

Top Widening Credit Default Swaps (CDS)	Top Narrowing Credit Default Swaps (CDS)
Rite Aid Corp. (5Y Sen USD MR14) Weatherford International LTD (5Y Sen USD MR14) Hertz Corp. (5Y Sen USD CR14)	Ghana, Republic of (5Y Sen USD CR14) Road King Infrastructure LTD (5Y Sen USD CR14) Cable & Wireless Communication (5Y Sen USD CR14)

Loans and Credit Market Overview

SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, notable secondary activity:

• Symantec Corp., Broadcom LTD, Toll Brothers Inc., Cole-Parmer Instrument Co.

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 36 bp (basis points), as of 12/09/19
• Net negative capital flows into high-yield ETFs & mutual funds

STOCKS FELL DUE AGAIN TO THE FEAR THAT TARIFFS WILL BE LEVIED ON DECEMBER 15TH. The US and China are both hinting that no tariffs will be levied and that in fact some tariffs may be rescinded. The 10-year note lost 1.3 basis points. S&P -0.11%, Dow -0.10%, NASDAQ -0.07%.

THE HOUSE JUDICIARY COMMITTEE PASSED 2 ARTICLES OF IMPEACHMENT. The two articles of impeachment were obstruction of justice and abuse of power. ADI proprietary index data showed a net yield increment for high-grade versus high-yield bonds. High-yield edged out high-yield. Among high-grade bonds showing topmost price gains at appreciable volumes traded,  CVS Caremark Corp. (USD) 5.75% 5/15/2041  made analysts’ ‘Conviction Buy’ list. (See the chart below for CVS Caremark Corp. bonds) Pierre Robert

Key Gainers and Losers	Volume Leaders
+   Abbvie Inc. 4.25% 11/21/2049 144A + 0.0%   Toledo Hospital 6.015% 11/15/2048 + 0.9%   BNP Paribas VAR% 1/10/2030 144A + 0.2% –   IBM Corp. 3.5% 5/15/2029 -0.2%   Abbvie Inc. 3.2% 11/21/2029 144A -0.0%   CVS Health Corp. 5.05% 3/25/2048 -0.6%	IBM Corp.   3.5% 5/15/2029 Abbvie Inc.   4.25% 11/21/2049 144A Toledo Hospital   6.015% 11/15/2048

Industry Returns Tracker

Industry Past Day Past Week Past Month Past Quarter YTD Past Year Agriculture, Forestry, Fishing 0.12% 0.27% 0.63% 1.20% 6.16% 6.23% Mining 0.14% 0.35% 1.14% 0.37% 12.24% 13.22% Construction 0.01% 0.22% 1.09% 0.65% 10.32% 10.92% Manufacturing 0.09% 0.30% 1.15% 0.92% 11.24% 11.89% Transportion, Communication, Electric/Gas 0.15% 0.37% 1.47% 0.68% 14.23% 15.40% Wholesale 0.13% 0.32% 1.03% 1.18% 12.95% 13.37% Retail 0.10% 0.34% 1.19% 0.82% 12.63% 13.20% Finance, Insurance, Real-Estate 0.07% 0.18% 0.81% 0.83% 9.76% 10.66% Services 0.10% 0.28% 1.06% 0.77% 11.35% 12.14% Public Administration 0.08% 0.04% 0.33% 0.15% 4.75% 5.61% Energy 0.17% 0.38% 1.17% 0.45% 12.51% 13.33%   Total returns (non-annualized) by rating, market weighted.

New Issues	New Issues [Continued]
1. Welltower Inc. (USD) 2.7% 2/15/2027 (12/09/2019): 500MM Senior Unsecured Notes, Price at Issuance 99.893, Yielding 2.72%. 2. Quest Diagnostics Inc. (USD) 2.95% 6/30/2030 (12/09/2019): 800MM Senior Unsecured Notes, Price at Issuance 99.738, Yielding 2.98%. 3. Steel Dynamics (USD) 2.8% 12/15/2024 (12/09/2019): 400MM Senior Unsecured Notes, Price at Issuance 99.925, Yielding 2.82%.

NEW ISSUANCE WATCH: on 11/14/19 participants welcome a $1000MM new corporate-bond offering by
Nationwide Financial Service. The most recent data showed a money flowed out of ETF/mutual funds for the week ended 11/15/2019, with a net outflow of $240 Million.

Top Widening Credit Default Swaps (CDS)	Top Narrowing Credit Default Swaps (CDS)
Rite Aid Corp. (5Y Sen USD MR14) Weatherford International LTD (5Y Sen USD MR14) Hertz Corp. (5Y Sen USD CR14)	Ghana, Republic of (5Y Sen USD CR14) Road King Infrastructure LTD (5Y Sen USD CR14) Cable & Wireless Communication (5Y Sen USD CR14)

Loans and Credit Market Overview

SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, notable secondary activity:

• Symantec Corp., Broadcom LTD, Toll Brothers Inc., Cole-Parmer Instrument Co.

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 36 bp (basis points), as of 12/10/19
• Net positive capital flows into high-yield ETFs & mutual funds

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