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North American Bond Research – November 1, 2019

Posted on November 1, 2019
HIGH YIELD BOND RESEARCH
November 1, 2019
Bond Markets

S&P 500 closed at a record high! Stocks and bond yields rose in conjunction. Trade tensions have lessened but no deal is in print yet. The 10-year note rose 3.7 basis points. S&P +0.97%, DOW +1.11, NASDAQ +1.14%.
China won a $3.6 billion WTO arbitration. ADI proprietary index data showed a net yield increment for high-grade versus high-yield bonds. Aramco greenlighted their IPO-record sale planned. High-grade edged out high-yield. Among high-grade bonds showing topmost price gains at appreciable volumes traded, Georgia Power Co. (USD) 4.75% 9/1/2040 made analysts’ ‘Conviction Buy’ list. (See the chart below for  ADI Indices) Corey Mahoney
Key Gainers and Losers Volume Leaders
+   Kraft Heinz Co. 4.375% 6/1/2046 (2) + 1.8%
  CVS Health Corp. 5.05% 3/25/2048 + 0.5%
–   General Electric Co. FLT% PERP (1) -1.6%
  Bank of America Corp. 2.328% 10/1/2021 -0.1%
Kraft Heinz Co.   4.375% 6/1/2046 (2)
EQT Corp.   3.9% 10/1/2027
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.06% -0.14% 1.25% 3.53% 17.38% 17.12%
Mining -0.42% -0.42% -1.22% -3.72% 5.07% 0.45%
Construction -0.09% -0.13% 1.04% 3.09% 14.98% 13.90%
Manufacturing -0.03% 0.02% 0.85% 2.10% 11.69% 9.99%
Transportion, Communication, Electric/Gas 0.02% -0.32% 0.35% 1.77% 13.64% 11.52%
Wholesale -0.07% -0.02% 0.40% 1.36% 12.24% 9.66%
Retail -0.13% -0.18% 0.63% 1.83% 15.18% 12.61%
Finance, Insurance, Real-Estate 0.03% 0.05% 0.70% 2.31% 13.72% 11.69%
Services -0.06% -0.09% 0.77% 2.26% 12.86% 11.18%
Public Administration -0.18% -0.14% 0.87% 1.74% 13.71% 15.17%
Energy -0.29% -0.31% -1.43% -3.01% 5.99% 1.64%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. PACCAR Financial Corp. (USD) 1.9% 2/7/2023 (10/31/2019): 300MM Senior Unsecured Notes, Price at Issuance 99.995, Yielding 1.9%. 1. LIONSGATE: $3.6 billion bond and bank financing. Expected 3rd Quarter 2016.

2. FERRO CORP: $200 million offering senior notes due 2016, expected week of July 21, 2008.

Additional Commentary

NEW ISSUANCE WATCH: on 10/30/19 participants welcome a $2650MM new corporate-bond offering by
TransDigm Group Inc. The most recent data showed a money flowed out of ETF/mutual funds for the week ended 10/11/2019, with a net outflow of $1.5 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 XR14)
Ghana, Republic of (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:

  • Cole-Parmer Instrument Co., United Pacific, Flexitallic, McDermott International Inc.

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 37 bp (basis points), as of 10/31/19
  • Net positive 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.

 

 

INVESTMENT GRADE BOND RESEARCH
November 1, 2019
Bond Markets

S&P 500 closed at a record high! Stocks and bond yields rose in conjunction. Trade tensions have lessened but no deal is in print yet.  The 10-year note rose 3.7 basis points. S&P +0.97%, DOW +1.11, NASDAQ +1.14%.

S&P 500 closed at a record high! Stocks and bond yields rose in conjunction. Trade tensions have lessened but no deal is in print yet. ADI proprietary index data showed a net yield increment for high-grade versus high-yield bondsHigh-grade edged out high-yield. Among high-grade bonds showing topmost price gains at appreciable volumes traded, Georgia Power Co. (USD) 4.75% 9/1/2040 made analysts’ ‘Conviction Buy’ list. (See the chart for Georgia Power Co. bonds below) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Kraft Heinz Co. 4.375% 6/1/2046 (2) + 1.8%
  EQT Corp. 3.9% 10/1/2027 + 2.0%
–   General Electric Co. FLT% PERP (1) -2.0%
  United Technologies Corp. 3.75% 11/1/2046 -1.2%
Kraft Heinz Co.   4.375% 6/1/2046 (2)
Kraft Heinz Co.   3.95% 7/15/2025
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.18% 0.17% 0.38% 1.16% 5.76% 6.53%
Mining 0.49% 0.37% 0.07% 2.52% 12.67% 13.50%
Construction 0.39% 0.47% 0.34% 2.30% 9.93% 10.94%
Manufacturing 0.44% 0.38% 0.37% 3.01% 11.48% 12.47%
Transportion, Communication, Electric/Gas 0.55% 0.40% 0.19% 3.49% 14.51% 16.38%
Wholesale 0.39% 0.47% 0.62% 3.22% 13.12% 13.08%
Retail 0.51% 0.43% 0.32% 3.62% 12.86% 14.23%
Finance, Insurance, Real-Estate 0.33% 0.31% 0.40% 2.42% 9.65% 10.86%
Services 0.43% 0.25% 0.32% 3.17% 11.36% 13.12%
Public Administration 0.36% 0.26% 0.17% 1.46% 4.38% 6.00%
Energy 0.48% 0.36% 0.04% 2.49% 12.93% 13.57%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. PACCAR Financial Corp. (USD) 1.9% 2/7/2023 (10/31/2019): 300MM Senior Unsecured Notes, Price at Issuance 99.995, Yielding 1.9%.

2. Toronto Hydro Corp. (CAD) 2.43% 12/11/2029 (11/01/2019): 200MM Senior Unsecured Notes, Price at Issuance 99.928, Yielding 2.44%.

Additional Commentary

NEW ISSUANCE WATCH: on 10/29/19 participants welcome a $200MM new corporate-bond offering by
Penn State Health.The most recent data showed a money flowed out of ETF/mutual funds for the week ended 10/11/2019, with a net outflow of $1.5 billion.
Top Widening Credit Default Swaps (CDS) Top Narrowing Credit Default Swaps (CDS)
Rite Aid Corp. (5Y Sen USD MR14)
Hertz Corp. (5Y Sen USD MR14)
Ghana, Republic of (5Y Sen USD CR14)
SuperValu Inc. (5Y Sen USD MR14)

Loans and Credit Market Overview

SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, notable secondary activity:

  • Cole-Parmer Instrument Co., United Pacific, Flexitallic, McDermott International Inc.

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 37 bp (basis points), as of 10/31/19
  • Net positive 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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