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North American Bond Research – February 4, 2020

Posted on February 4, 2020
HIGH YIELD BOND RESEARCH
February 4, 2020
Bond Markets

MARKETS KEPT REBOUNDING FROM LARGE LOSES LAST WEEK DUE TO THE CORONAVIRUS. TESLA’S SHARES ALONG WITH APPLE, AMAZON AND MICROSOFT KEEP SURGING!  10 year Treasury notes were down 4.7 basis points. S&P 10 year Treasury notes were down 3.8 basis points. S&P +0.72%, Dow +0.55%, NASDAQ +1.34%.
CHINA TO DATE HAS HAD 20600+ CASES AND 430+ DEATHS. INFECTION HAS SPREAD TO OVER 27 COUNTRIES WITH 200+ CONFIRMED CASES.   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
+   Intelsat Jackson Hldg SA 5.5% 8/1/2023 (1) + 3.2%
  Teva Pharmaceutical Industries LTD 2.8% 7/21/2023 + 1.1%
  Sprint Capital Corp. 6.875% 11/15/2028 + 0.5%
–   EQT Corp. 6.125% 2/1/2025 -1.4%
  Micron Technology Inc. 4.663% 2/15/2030 -0.5%
  Charter Communications Operating LLC 4.8% 3/1/2050 -0.4%
Intelsat Jackson Hldg SA   5.5% 8/1/2023 (1)
EQT Corp.   6.125% 2/1/2025
Micron Technology Inc.   4.663% 2/15/2030
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.11% 0.07% 0.56% 3.07% 1.16% 17.45%
Mining -0.21% -0.19% -3.01% 2.12% -2.32% 2.53%
Construction 0.06% 0.40% 0.94% 2.26% 1.11% 13.63%
Manufacturing 0.03% 0.22% 0.62% 3.45% 0.97% 11.37%
Transportion, Communication, Electric/Gas 0.05% 0.11% 0.50% 2.74% 0.79% 12.48%
Wholesale -0.01% 0.08% 0.54% 2.52% 0.78% 9.51%
Retail -0.02% 0.41% 0.67% 2.81% 0.85% 13.78%
Finance, Insurance, Real-Estate 0.02% 0.34% 0.84% 2.62% 1.09% 12.07%
Services 0.04% 0.26% 0.41% 2.56% 0.62% 10.76%
Public Administration 0.21% 0.03% 0.83% 3.07% 1.18% 13.24%
Energy -0.18% -0.12% -2.16% 2.73% -1.49% 4.35%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 02/04/2020)
1. EMPTY PLACEHOLDER: EMPTY
Additional Commentary

NEW ISSUANCE WATCH: on 02/03/2020 participants welcome a $300MM new corporate-bond offering by
Castle US Holdings.  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 18 bp (basis points), as of 02/04/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
February 4, 2020
Bond Markets

MARKETS KEPT REBOUNDING FROM LARGE LOSES LAST WEEK DUE TO THE CORONAVIRUS. TESLA’S SHARES ALONG WITH APPLE, AMAZON AND MICROSOFT KEEP SURGING!  10 year Treasury notes were down 4.7 basis points. S&P 10 year Treasury notes were down 3.8 basis points. S&P +0.72%, Dow +0.55%, NASDAQ +1.34%.
CHINA TO DATE HAS HAD 20600+ CASES AND 430+ DEATHS. INFECTION HAS SPREAD TO OVER 27 COUNTRIES WITH 200+ CONFIRMED CASES. 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,  Anheuser Busch Companies Inc (USD) 5.75% 4/1/2036  made analysts’ ‘Conviction Buy’ list. (See the chart below for Anheuser Busch Companies Inc bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Wells Fargo Bank NA 2.6% 1/15/2021 + 0.1%
  Lowe’s Companies Inc. 4.55% 4/5/2049 + 0.0%
  Energy Transfer Operating, LP 5% 5/15/2050 + 0.4%
–   CVS Health Corp. 5.05% 3/25/2048 -0.7%
  GE Capital Intl. Funding Co. 4.418% 11/15/2035 -0.8%
  Goldman Sachs Group Inc. VAR% 5/1/2029 -0.4%
CVS Health Corp.   5.05% 3/25/2048
GE Capital Intl. Funding Co.   4.418% 11/15/2035
Goldman Sachs Group Inc.   VAR% 5/1/2029
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.01% 0.95% 1.99% 3.36% 2.25% 6.03%
Mining -0.06% 0.22% 1.02% 2.60% 1.65% 11.89%
Construction -0.05% 0.27% 1.57% 2.70% 2.28% 11.63%
Manufacturing -0.02% 0.31% 1.56% 2.62% 2.07% 11.99%
Transportion, Communication, Electric/Gas -0.07% 0.26% 1.90% 3.18% 2.66% 15.82%
Wholesale 0.01% 0.29% 1.51% 2.86% 1.96% 14.22%
Retail 0.01% 0.31% 1.46% 2.48% 2.03% 13.36%
Finance, Insurance, Real-Estate -0.01% 0.34% 1.30% 2.21% 1.69% 10.42%
Services -0.02% 0.33% 1.53% 2.35% 1.97% 11.61%
Public Administration 0.01% 0.35% 0.78% 0.98% 0.99% 5.30%
Energy -0.06% 0.19% 0.89% 2.63% 1.51% 12.33%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Discover Bank (USD) 2.7% 2/6/2030 (02/03/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.791, Yielding 2.72%.

2. Federation Des Caisses Desjardins (USD) 2.05% 2/10/2025 144A (02/03/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.877, Yielding 2.08%.

3. Citizens Financial Group Inc. (USD) 2.5% 2/6/2030 (02/03/2020): 300MM Senior Unsecured Notes, Price at Issuance 99.78, Yielding 2.52%.

Additional Commentary

NEW ISSUANCE WATCH: on 02/03/2020 participants welcome a $1800MM new corporate-bond offering by Open Test CorpThe 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 18 bp (basis points), as of 02/04/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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