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North American Bond Research – February 24, 2020

Posted on February 24, 2020
INVESTMENT GRADE BOND RESEARCH
February 24, 2020
Bond Markets

MULTIPLE COMPANIES HAVE COME OUT, FROM COCA-COLA TO APPLE, THAT THE CORONAVIRUS WILL AFFECT THEIR EARNINGS. ADVISORSHARES CEO HAS WARNED THAT THE TOP OF THE MARKET HAS OCCURRED.  10 year Treasury notes were down 9.4 basis points.  S&P -3.35%, Dow -3.56%, NASDAQ -3.71%.
CORONA VIRUS UPDATE: CHINA TO DATE HAS HAD 100000+ CASES AND 2300+ DEATHS. (Advantage Data Inc.). Extensive corporate-bond index data showed a net daily grade increment for high-grade versus high-yield constituents. High-yield bonds edged out high-grade debt as of 3 PM, London time.  Among European high-yield bonds showing a concurrence of top price gains at appreciable volumes traded,  Bombardier Inc. (USD) 7.5% 12/1/2024 Reg S made some analysts ‘Conviction buy’ lists. (See the chart for Bombardier Inc. bonds below). Pierre Robert
Key Gainers and Losers Volume Leaders
+   Amgen Inc. 3.375% 2/21/2050 + 0.1%
  Bank of America Corp. 2.015% 2/13/2026 + 0.2%
  Halliburton Co. 2.92% 3/1/2030 + 1.2%
–   GE Capital Intl. Funding Co. 4.418% 11/15/2035 -0.4%
  CVS Health Corp. 5.05% 3/25/2048 -0.1%
  Barclays PLC 5.25% 8/17/2045 -1.1%
Amgen Inc.   3.375% 2/21/2050
GE Capital Intl. Funding Co.   4.418% 11/15/2035
CVS Health Corp.   5.05% 3/25/2048
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.21% 0.21% 2.10% 4.00% 2.87% 5.87%
Mining 0.20% 0.67% 1.71% 3.85% 2.65% 12.46%
Construction 0.18% 0.13% 1.69% 3.34% 2.77% 12.10%
Manufacturing 0.18% 0.48% 1.63% 3.22% 2.59% 12.49%
Transportion, Communication, Electric/Gas 0.27% 0.74% 2.28% 4.24% 3.59% 16.41%
Wholesale 0.19% 0.59% 1.41% 3.28% 2.40% 14.41%
Retail 0.20% 0.54% 1.92% 3.47% 2.76% 14.30%
Finance, Insurance, Real-Estate 0.14% 0.39% 1.43% 2.66% 2.15% 10.63%
Services 0.16% 0.47% 1.69% 3.02% 2.54% 12.23%
Public Administration 0.08% 0.22% 0.75% 1.09% 1.08% 5.15%
Energy 0.22% 0.73% 1.79% 4.07% 2.62% 13.02%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]

(None Current 02/24/2020)
Additional Commentary

NEW ISSUANCE WATCH: on 02/202020 participants welcome a $750MM new corporate-bond offering by Citrix SystemsThe most recent data showed money flowed in of ETF/mutual funds for the week ended 01/10/2020, with a net inflow of $9.8 billion.
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 11 bp (basis points), as of 02/21/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

 

HIGH YIELD BOND RESEARCH
February 24, 2020
Bond Markets

MULTIPLE COMPANIES HAVE COME OUT, FROM COCA-COLA TO APPLE, THAT THE CORONAVIRUS WILL AFFECT THEIR EARNINGS. ADVISORSHARES CEO HAS WARNED THAT THE TOP OF THE MARKET HAS OCCURRED.  10 year Treasury notes were down 9.4 basis points.  S&P -3.35%, Dow -3.56%, NASDAQ -3.71%.
CORONA VIRUS UPDATE: CHINA TO DATE HAS HAD 100000+ CASES AND 2300+ DEATHS.   Among high-grade bonds showing topmost price gains at appreciable volumes traded, JC Penney Co Inc (USD) 7.125% 11/15/2023 made analysts’ ‘Conviction Buy’ list. (See the chart below for JC Penney Co Inc. bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Pacific Gas & Electric Co. 6.05% 3/1/2034 + 1.3%
  US Steel Corp. 6.875% 8/15/2025 + 0.1%
  Oneok Inc. 7.5% 9/1/2023 + 0.2%
–   HCA Inc. 3.5% 9/1/2030 -0.8%
  Teva Pharmaceutical Industries LTD 3.15% 10/1/2026 -1.8%
  Ford Motor Co. 5.291% 12/8/2046 -3.4%
HCA Inc.   3.5% 9/1/2030
Pacific Gas & Electric Co.   6.05% 3/1/2034
EQT Midstream Partners LP   4.75% 7/15/2023
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.15% 0.43% 0.96% 4.13% 2.19% 18.48%
Mining -0.13% -0.20% -2.81% 2.39% -2.71% 1.16%
Construction 0.01% 0.25% 1.57% 3.60% 2.15% 13.14%
Manufacturing -0.03% 0.17% 0.70% 4.08% 1.93% 11.39%
Transportion, Communication, Electric/Gas 0.04% 0.28% 1.44% 4.82% 2.44% 13.20%
Wholesale -0.04% 0.06% -0.19% 3.18% 1.46% 9.15%
Retail 0.02% 0.08% 0.54% 4.22% 1.35% 12.26%
Finance, Insurance, Real-Estate -0.01% 0.21% 0.90% 3.56% 1.92% 12.32%
Services -0.05% 0.10% 0.40% 3.29% 1.34% 10.44%
Public Administration 0.32% 0.70% 2.84% 4.44% 2.64% 13.46%
Energy -0.09% -0.18% -2.32% 3.08% -1.96% 2.86%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Graphic Packaging International Inc. (USD) 3.5% 3/15/2028 Reg S (02/24/2020): 450MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.5%. 1. EMPTY PLACEHOLDER: EMPTY
Additional Commentary

NEW ISSUANCE WATCH: on 02/21/2020 participants welcome a $600MM new corporate-bond offering by
Mattamy Group.  The most recent data showed money flowed in of ETF/mutual funds for the week ended 01/10/2020, with a net inflow of $9.8 billion.
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 11 bp (basis points), as of 02/21/2020
  • Net negative 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.

 


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