North American Bond Research – December 6, 2019

PAYROLL GAINS OF 266,000 NEW JOBS BLOWS AWAY JOB FORECASTS. Stocks jump and bonds fall in response. The 10-year note gained 1.6 basis points. S&P +0.91%, Dow +1.22%, NASDAQ +1.00%.

Key Gainers and Losers	Volume Leaders
+   Select Medical Corp. 6.25% 8/15/2026 144A + 0.4%   Intelsat Luxembourg SA 8.125% 6/1/2023 + 1.2%   Teva Pharmaceutical Industries LTD 2.8% 7/21/2023 + 0.5% –   Expedia Inc. 3.8% 2/15/2028 (1) -0.8%   General Motors Co. 6.25% 10/2/2043 -0.6%   NGPL Pipeco LLC 4.375% 8/15/2022 144A -0.1%	Select Medical Corp.   6.25% 8/15/2026 144A Expedia Inc.   3.8% 2/15/2028 (1) Intelsat Luxembourg SA   8.125% 6/1/2023

Industry Returns Tracker

Industry Past Day Past Week Past Month Past Quarter YTD Past Year Agriculture, Forestry, Fishing 0.17% 0.35% 0.60% 2.09% 18.09% 18.84% Mining 0.10% 0.39% -0.78% -2.01% 5.52% 2.74% Construction 0.06% 0.29% 0.53% 2.16% 16.37% 15.63% Manufacturing 0.04% 0.26% 0.99% 2.24% 12.85% 11.57% Transportion, Communication, Electric/Gas 0.01% 0.03% -0.17% 0.62% 13.11% 11.68% Wholesale 0.06% 0.09% 0.05% 0.46% 11.91% 10.33% Retail 0.03% 0.25% -0.09% 0.76% 15.37% 13.06% Finance, Insurance, Real-Estate 0.04% 0.17% 0.71% 1.82% 14.11% 13.00% Services 0.05% 0.21% 0.61% 1.68% 12.93% 11.59% Public Administration -0.08% 0.02% 0.45% 1.14% 14.29% 15.94% Energy 0.07% 0.19% -0.61% -1.92% 6.01% 3.72%   Total returns (non-annualized) by rating, market weighted.

New Issues	Forward Calendar
1. Twitter Inc. (USD) 3.875% 12/15/2027 144A (12/05/2019): 700MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.88%. 2. Twitter Inc. (USD) 3.875% 12/15/2027 Reg S (12/05/2019): 700MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.88%. 3. Moog Inc. (USD) 4.25% 12/15/2027 144A (12/06/2019): 0MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.25%.	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) 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 12/06/19
• Net negative capital flows into high-yield ETFs & mutual funds

PAYROLL GAINS OF 266,000 NEW JOBS BLOWS AWAY JOB FORECASTS. Stocks jump and bonds fall in response. The 10-year note gained 1.6 basis points. S&P +0.91%, Dow +1.22%, NASDAQ +1.00%.

CHINA TEMPORARILY REPEALS TARIFFS FOR PURCHASES OF PORK AND SOYBEANS. Negotiations are getting closer and closer. The Markets are waiting for a deal.   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 + 0.2%   Altria Group Inc. 5.95% 2/14/2049 + 0.8%   Bayer US Finance LLC 4.375% 12/15/2028 144A + 0.4% –   CVS Health Corp. 5.05% 3/25/2048 -0.1%   Intesa Sanpaolo SPA 4% 9/23/2029 -0.5%   GE Capital Intl. Funding Co. 4.418% 11/15/2035 -0.2%	CVS Health Corp.   5.05% 3/25/2048 Abbvie Inc.   4.25% 11/21/2049 144A Intesa Sanpaolo SPA   4% 9/23/2029

Industry Returns Tracker

Industry Past Day Past Week Past Month Past Quarter YTD Past Year Agriculture, Forestry, Fishing -0.02% 0.01% 0.51% 1.09% 6.09% 6.39% Mining -0.13% -0.06% 0.76% -0.05% 12.15% 13.30% Construction -0.02% 0.08% 0.82% 0.27% 9.41% 10.46% Manufacturing -0.07% 0.02% 0.92% 0.70% 11.32% 12.21% Transportion, Communication, Electric/Gas -0.13% -0.10% 1.09% 0.33% 14.31% 15.75% Wholesale -0.07% -0.02% 0.89% 1.13% 13.51% 13.97% Retail -0.05% 0.10% 0.99% 0.53% 12.80% 13.82% Finance, Insurance, Real-Estate -0.05% 0.06% 0.71% 0.70% 10.25% 11.42% Services -0.07% -0.01% 0.80% 0.48% 11.36% 12.46% Public Administration -0.04% -0.02% 0.22% 0.04% 4.65% 5.79% Energy -0.11% -0.06% 0.74% -0.00% 12.37% 13.36%   Total returns (non-annualized) by rating, market weighted.

New Issues	New Issues [Continued]
1. Baptist Health Obligated Group (USD) 4.1% 12/1/2049 (12/05/2019): 74MM Unsecured Notes, Price at Issuance 97.985, Yielding 4.22%. 2. Memorial Health Services (USD) 3.447% 11/1/2049 (12/05/2019): 300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.45%. 3. MUFG Union Bank NA (USD) 2.1% 12/9/2022 (12/05/2019): 700MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.1%.

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 12/06/19
• Net positive capital flows into high-yield ETFs & mutual funds

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