Grid IconAll Posts Market Summaries

North American Bond Research – December 18, 2019

Posted on December 18, 2019
HIGH YIELD BOND RESEARCH
December 18, 2019

Bond Markets


HOUSE IS DEBATING IMPEACHMENT. REPUBLICANS ARE STICKING TO THE ARGUMENT THAT NOTHING WAS WRONG. DEMOCRATS STATING TRUMP VIOLATED THE CONSTITUTION AND IS A THREAT TO DEMOCRACY. The 10-year note gained 3.3 basis points. S&P -0.04%, Dow -0.10%, NASDAQ  +0.05%.
WITH BREXIT ELECTION BEHIND THEM, BORIS JOHNSON AND THE CONSERVATIVES SET A FRIDAY VOTE TO FINALIZE JANUARY 31, 2020 BREXIT. Pound was slightly stronger. The banking system is a concern going forward after BREXIT. Among high-grade bonds showing topmost price gains at appreciable volumes traded, Level 3 Financing Inc. (USD) 5.375% 8/15/2022 made analysts’ ‘Conviction Buy’ list. (See the chart below for Level 3 Financing Inc. bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Intelsat Connect Finance 9.5% 2/15/2023 144A + 11.5%
  Intelsat Jackson Hldg SA 8.5% 10/15/2024 144A + 2.5%
  Terrier Media Buyer, Inc. 8.875% 12/15/2027 144A + 0.5%
–   VRX Escrow Corp. 6.125% 4/15/2025 144A -0.1%
  Chemours Co. LLC 5.375% 5/15/2027 -1.8%
  Bombardier Inc. 7.875% 4/15/2027 144A -0.0%
Bausch Health Cos Inc.   5% 1/30/2028 144A
Intelsat Connect Finance   9.5% 2/15/2023 144A
Expedia Inc.   3.8% 2/15/2028 (1)
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.08% 0.63% 1.60% 3.28% 19.54% 19.60%
Mining 0.41% 2.77% 3.42% -0.50% 8.86% 6.19%
Construction 0.05% 0.41% 1.44% 2.81% 17.26% 16.45%
Manufacturing 0.08% 0.61% 1.71% 2.87% 13.41% 12.20%
Transportion, Communication, Electric/Gas 0.09% 0.68% 1.57% 1.53% 14.68% 13.22%
Wholesale 0.11% 0.64% 1.23% 1.63% 13.21% 11.70%
Retail 0.11% 0.77% 1.47% 1.85% 16.29% 14.43%
Finance, Insurance, Real-Estate 0.06% 0.50% 1.32% 2.43% 14.62% 13.40%
Services 0.08% 0.52% 1.38% 2.30% 13.72% 12.57%
Public Administration 0.22% 0.07% 0.68% 2.11% 14.71% 14.49%
Energy 0.34% 2.44% 3.02% -0.17% 9.41% 7.01%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 12/18/2019)
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

Additional Commentary


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)
Export Credit Bank of Turkey (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 35 bp (basis points), as of 12/18/19
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
December 18, 2019

Bond Markets


HOUSE IS DEBATING IMPEACHMENT. REPUBLICANS ARE STICKING TO THE ARGUMENT THAT NOTHING WAS WRONG. DEMOCRATS STATING TRUMP VIOLATED THE CONSTITUTION AND IS A THREAT TO DEMOCRACY. The 10-year note gained 3.3 basis points. S&P -0.04%, Dow -0.10%, NASDAQ  +0.05%.
WITH BREXIT ELECTION BEHIND THEM, BORIS JOHNSON AND THE CONSERVATIVES SET A FRIDAY VOTE TO FINALIZE JANUARY 31, 2020 BREXIT. Pound was slightly stronger. The banking system is a concern going forward after BREXIT. ADI proprietary index data showed a net yield increment for high-grade versus high-yield bondsHigh-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
+   FedEx Corp. 4.05% 2/15/2048 + 3.4%
  Waste Management Inc. 2.95% 6/15/2024 + 0.0%
  Abbvie Inc. 2.6% 11/21/2024 144A + 0.0%
–   Cigna Corp. 4.9% 12/15/2048 -0.6%
  Abbvie Inc. 4.25% 11/21/2049 144A -0.4%
  GE Capital Intl. Funding Co. 4.418% 11/15/2035 -0.3%
Cigna Corp.   4.9% 12/15/2048
Abbvie Inc.   4.25% 11/21/2049 144A
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 0.10% 0.34% 0.78% 1.46% 7.24% 7.34%
Mining 0.08% 0.49% 1.08% 1.45% 12.95% 13.06%
Construction 0.03% 0.10% 0.83% 1.83% 10.52% 10.91%
Manufacturing 0.02% 0.08% 0.72% 1.93% 11.52% 11.70%
Transportion, Communication, Electric/Gas 0.04% 0.15% 0.95% 2.12% 14.57% 15.05%
Wholesale 0.04% 0.15% 0.82% 2.23% 14.00% 14.17%
Retail 0.03% 0.10% 0.79% 1.90% 13.31% 13.47%
Finance, Insurance, Real-Estate 0.02% 0.09% 0.51% 1.57% 10.02% 10.55%
Services 0.03% 0.09% 0.59% 1.75% 11.49% 11.81%
Public Administration 0.02% -0.00% 0.07% 0.43% 4.49% 5.18%
Energy 0.08% 0.53% 1.22% 1.64% 13.42% 13.41%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Royal Bank of Canada (CAD) VAR% 12/23/2029 (12/17/2019): 1500MM Subordinated Notes, Price at Issuance 99.991.

2. Alliance Data Systems Corp. (USD) 4.75% 12/15/2024 144A (12/17/2019): 850MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.75%.

3. Massachusetts Institute of Technology (USD) 2.989% 7/1/2050 (12/17/2019): 300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.99%.

Additional Commentary


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 35 bp (basis points), as of 12/18/19
  • 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.

 


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

Share

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