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North American Bond Research – December 2, 2019

Posted on December 2, 2019
HIGH YIELD BOND RESEARCH
December 2, 2019

Bond Markets


THE ELUSIVE US/CHINA TRADE AGREEMENT AND THE IMPENDING TARIFF INCREASE, CAUSED STOCKS TO FALL. Trump signed a bill supporting the Hong Kong protestors angered China who in turn banned US military visits to the city and cut off non-profit’s access to the city. The 10-year note gained 0.6 basis points. S&P -0.86%, Dow -0.96%, NASDAQ -1.04%.
MANUFACTURING IN THE US CONTRACTED FOR THE FOURTH MONTH IN A ROW. The index fell from 48.4 to 48.1. Manufacturing worldwide is contracting largely due to trade tensions between nations and especially between the US and China. High-yield edged out high-yield. Among high-grade bonds showing topmost price gains at appreciable volumes traded, JC Penney Co Inc (USD) 7.625% 3/1/2097 made analysts’ ‘Conviction Buy’ list. (See the chart below for JC Penney Co Inc bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Teva Pharmaceuticals Fin BV 6.75% 3/1/2028 + 0.3%
  Pacific Gas & Electric Co. 3.5% 10/1/2020 + 0.5%
  Sprint Capital Corp. 6.875% 11/15/2028 + 0.1%
–   Teva Pharmaceutical Industries LTD 7.125% 1/31/2025 144A -0.1%
  Communications Sales & Leasing Inc. 8.25% 10/15/2023 -0.9%
  Park Aerospace Hldgs LTD 5.5% 2/15/2024 144A -0.1%
Teva Pharmaceutical Industries LTD   7.125% 1/31/2025 144A
Teva Pharmaceuticals Fin BV   6.75% 3/1/2028
Embarq Corp.   7.995% 6/1/2036
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.08% 0.09% -0.21% 2.44% 16.84% 17.02%
Mining 0.04% 0.11% -0.34% -1.76% 5.33% 3.16%
Construction 0.08% 0.56% 0.12% 2.15% 15.92% 15.06%
Manufacturing 0.05% 0.44% 0.85% 2.16% 12.46% 11.40%
Transportion, Communication, Electric/Gas 0.05% 0.47% 0.25% 0.71% 13.08% 11.78%
Wholesale 0.10% 0.15% -0.30% 0.07% 11.48% 9.72%
Retail 0.05% 0.43% -0.54% 1.75% 15.15% 12.93%
Finance, Insurance, Real-Estate 0.06% 0.40% 0.31% 1.62% 13.52% 12.33%
Services 0.06% 0.36% 0.01% 1.44% 12.63% 11.27%
Public Administration 0.22% 0.52% 0.49% 1.46% 14.51% 16.41%
Energy 0.06% 0.23% -0.18% -1.50% 6.22% 4.52%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 12/02/2019)
1. Qmax Financial Holdings Inc.: $225MM, Expected 4th Quarter 2019

2. Diamondback Energy Inc.: High-yield notes, Expected Q4 2019

3. Presidio Inc.: $1.775B high yield bonds, Expected 4th Quarter 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)
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 33 bp (basis points), as of 11/27/19
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
December 2, 2019

Bond Markets


THE ELUSIVE US/CHINA TRADE AGREEMENT AND THE IMPENDING TARIFF INCREASE, CAUSED STOCKS TO FALL. Trump signed a bill supporting the Hong Kong protestors angered China who in turn banned US military visits to the city and cut off non-profit’s access to the city. The 10-year note gained .6 basis points. S&P -0.86%, Dow -0.96%, NASDAQ -1.04%.
MANUFACTURING IN THE US CONTRACTED FOR THE FOURTH MONTH IN A ROW. The index fell from 48.4 to 48.1. Manufacturing worldwide is contracting largely due to trade tensions between nations and especially between the US and China. 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
+   Constellation Brands Inc. 2.25% 11/6/2020 + 0.1%
  21st Century Fox America 7.9% 12/1/2095 + 0.3%
  Deutsche Bank AG 3.95% 2/27/2023 + 0.2%
–   Abbvie Inc. 4.25% 11/21/2049 144A -0.8%
  CVS Health Corp. 4.3% 3/25/2028 -0.2%
  Telefonica Emisiones SAU 4.103% 3/8/2027 -0.5%
Abbvie Inc.   4.25% 11/21/2049 144A
Abbvie Inc.   3.2% 11/21/2029 144A
CVS Health Corp.   4.3% 3/25/2028
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.10% 0.31% 0.78% 1.39% 6.29% 6.39%
Mining -0.00% 0.29% 0.61% -0.18% 12.18% 14.24%
Construction 0.04% 0.18% 0.68% 0.13% 9.11% 10.37%
Manufacturing -0.03% 0.22% 0.84% 0.31% 11.09% 12.43%
Transportion, Communication, Electric/Gas -0.01% 0.31% 1.14% -0.12% 14.44% 16.86%
Wholesale 0.06% 0.23% 0.91% 0.84% 12.71% 13.61%
Retail -0.01% 0.22% 0.70% 0.06% 12.84% 14.49%
Finance, Insurance, Real-Estate 0.00% 0.14% 0.64% 0.45% 9.73% 11.05%
Services -0.01% 0.20% 0.73% 0.15% 11.19% 12.75%
Public Administration 0.01% 0.03% 0.28% 0.02% 4.58% 5.93%
Energy 0.00% 0.32% 0.67% -0.16% 12.58% 14.62%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]

(None Current 12/02/2019)

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)
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 33 bp (basis points), as of 11/27/19
  • Net positive capital flows into high-yield ETFs & mutual funds

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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.

 


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