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North American Bond Research – February 27, 2020

Posted on February 27, 2020
HIGH YIELD BOND RESEARCH
February 27, 2020
Bond Markets

WORLD MARKETS ARE DROPPING AGAIN. EUROPEAN AND US MARKETS ARE AGAIN DOWN.  10 year Treasury notes were down 2.0 basis points.  S&P -3.38%, Dow -3.42%, NASDAQ -3.36%.
CORONA VIRUS UPDATE: WORLD OUTBREAK TO DATE HAS HAD 100000+ CASES AND 4000+ DEATHS. THE VIRUS SEEMS TO BE SLOWING DOWN AS NEW CASES AND DEATHS SEEM TO BE ACCELERATING INTERNATIONALLY.      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
+   Chemours Co. LLC 6.625% 5/15/2023 + 0.0%
  B&G Foods Inc. 5.25% 9/15/2027 + 2.3%
  Jaguar Land Rover LTD 5.625% 2/1/2023 Reg S + 1.1%
  Ford Motor Co. 5.291% 12/8/2046 + 0.2%
–   Petrobras Global Finance BV 6.85% 6/5/2115 -0.9%
  HCA Inc. 3.5% 9/1/2030 -0.5%
  Whiting Petroleum Corp. 5.75% 3/15/2021 -15.7%
Petrobras Global Finance BV   6.85% 6/5/2115
HCA Inc.   3.5% 9/1/2030
Whiting Petroleum Corp.   5.75% 3/15/2021
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.09% -0.05% 0.71% 3.89% 1.96% 17.41%
Mining -1.05% -2.50% -3.84% -0.12% -4.84% -0.55%
Construction -0.10% -0.17% 0.96% 3.11% 2.01% 13.13%
Manufacturing -0.26% -0.49% 0.49% 2.99% 1.48% 10.51%
Transportion, Communication, Electric/Gas -0.33% -0.49% 0.90% 3.87% 1.96% 11.68%
Wholesale -0.26% -0.82% -0.58% 2.82% 1.07% 8.26%
Retail -0.32% -0.57% 0.44% 3.59% 1.38% 12.53%
Finance, Insurance, Real-Estate -0.29% -0.41% 0.37% 2.67% 1.43% 11.53%
Services -0.28% -0.40% 0.34% 2.79% 1.21% 9.95%
Public Administration 0.11% 0.22% 2.40% 4.66% 3.28% 14.65%
Energy -0.99% -2.13% -3.23% 0.72% -3.74% 1.19%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 02/27/2020)
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)
Weatherford International LTD (5Y Sen USD XR14)
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 12 bp (basis points), as of 02/26/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

NORTH AMERICAN INVESTMENT GRADE BOND RESEARCH
February 27, 2020
Bond Markets
EUROPEAN MARKETS ARE MOSTLY DOWN AGAIN. EUROPE IS AGAIN FACING EXPANDING CORONAVIRUS INFECTION IN ITALY AND FRANCE. TRUMP STATES VIRUS FEARS OVERBLOWN.  10 year Treasury notes were down 2.0 basis points.  S&P -0.38%, Dow -0.46%, NASDAQ -+0.18%.
CORONA VIRUS UPDATE: CHINA TO DATE HAS HAD 82000+ CASES AND 3200+ DEATHS. THE VIRUS SEEMS TO BE SLOWING DOWN AS NEW CASES AND DEATHS SEEM TO BE ACCELERATING INTERNATIONALLY.    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
+   Chemours Co. LLC 6.625% 5/15/2023 + 0.0%
  CenturyLink Inc. 5.8% 3/15/2022 + 0.1%
  Jaguar Land Rover LTD 5.625% 2/1/2023 Reg S + 1.1%
–   Petrobras Global Finance BV 6.85% 6/5/2115 -0.9%
  HCA Inc. 3.5% 9/1/2030 -0.5%
  Whiting Petroleum Corp. 5.75% 3/15/2021 -18.1%
Petrobras Global Finance BV   6.85% 6/5/2115
HCA Inc.   3.5% 9/1/2030
Whiting Petroleum Corp.   5.75% 3/15/2021
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.09% -0.05% 0.71% 3.89% 1.96% 17.41%
Mining -1.05% -2.50% -3.84% -0.12% -4.84% -0.55%
Construction -0.10% -0.17% 0.96% 3.11% 2.01% 13.13%
Manufacturing -0.26% -0.49% 0.49% 2.99% 1.48% 10.51%
Transportion, Communication, Electric/Gas -0.33% -0.49% 0.90% 3.87% 1.96% 11.68%
Wholesale -0.26% -0.82% -0.58% 2.82% 1.07% 8.26%
Retail -0.32% -0.57% 0.44% 3.59% 1.38% 12.53%
Finance, Insurance, Real-Estate -0.29% -0.41% 0.37% 2.67% 1.43% 11.53%
Services -0.28% -0.40% 0.34% 2.79% 1.21% 9.95%
Public Administration 0.11% 0.22% 2.40% 4.66% 3.28% 14.65%
Energy -0.99% -2.13% -3.23% 0.72% -3.74% 1.19%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 02/27/2020)
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 12 bp (basis points), as of 02/26/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

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