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North American Bond Research – November 18, 2019

Posted on November 18, 2019
HIGH YIELD BOND RESEARCH
November 18, 2019
Bond Markets

TRUMP MET TODAY WITH FEDERAL RESERVE BOARD CHAIR JEROME POWELL. They discussed interest rates, the strong dollar, rate cuts, and other economic issues. Trump has been a strong critic of the federal reserve. The 10-year note lost 2.6 basis points. S&P -0.04%, DOW +0.04%, NASDAQ +0.05%.
BILL GATES SURPASSED JEFF BEZOS AS THE RICHEST MAN IN THE WORLD. He is now worth $110 Billion dollars while Jeff is worth $109 Billion dollars. MSFT stock has jumped 48% so far this year. 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, JC Penney Co Inc (USD) 7.625% 3/1/2097 made analysts’ ‘Conviction Buy’ list. (See the chart below for JC Penney Co Inc bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Teva Pharmaceuticals Fin BV 6% 4/15/2024 + 1.1%
  Dresdner Funding 3 8.151% 6/30/2031 + 0.4%
  Goldman Sachs Group Inc. 5% PERP + 0.1%
–   Intelsat Luxembourg SA 8.125% 6/1/2023 -14.7%
  Digicel Group LTD 6% 4/15/2021 Reg S -1.4%
Intelsat Luxembourg SA   8.125% 6/1/2023
Antero Resources Corp.   5.625% 6/1/2023
Teva Pharmaceutical Industries LTD   3.15% 10/1/2026
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.32% 0.12% 0.29% 3.47% 17.76% 17.64%
Mining -0.01% -0.06% -0.21% -0.19% 5.33% 1.54%
Construction 0.04% -0.20% 0.18% 2.60% 14.43% 13.14%
Manufacturing 0.04% 0.17% 1.38% 2.85% 12.02% 10.49%
Transportion, Communication, Electric/Gas 0.05% -0.03% -0.12% 1.54% 13.52% 12.24%
Wholesale -0.06% 0.08% 0.03% 1.42% 11.83% 9.48%
Retail -0.08% -0.25% 0.32% 2.09% 15.20% 12.57%
Finance, Insurance, Real-Estate 0.02% 0.05% 0.83% 2.33% 13.67% 11.58%
Services 0.02% -0.21% 0.40% 2.56% 12.33% 10.88%
Public Administration 0.22% 0.45% 0.95% 1.86% 14.13% 15.56%
Energy 0.04% 0.01% -0.34% -0.32% 5.91% 2.43%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. SSL Robotics LLC (USD) 9.75% 12/31/2023 Reg S (11/18/2019): 1000MM Secured Notes, Price at Issuance 98, Yielding 10.34%. 1. Qmax Financial Holdings Inc.: $225MM, Expected 4th Quarter 2019

2. DDM Holding AG: ¬100MM, Expected Q4 2019

3. Alpha Auto Group: $225MM notes, Expected 4th Quarter 2019

Additional Commentary

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)
Hertz Corp. (5Y Sen USD CR14)
Hovnanian Enterprises Inc. (5Y Sen USD MR14)
Ghana, Republic of (5Y Sen USD CR14)
Road King Infrastructure LTD (5Y Sen USD MR14)
SuperValu Inc. (5Y Sen USD XR14)

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 34 bp (basis points), as of 11/18/19
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
November 18, 2019
Bond Markets

TRUMP MET TODAY WITH FEDERAL RESERVE BOARD CHAIR JEROME POWELL. They discussed interest rates, the strong dollar, rate cuts, and other economic issues. Trump has been a strong critic of the federal reserve. The 10-year note lost 2.6 basis points. S&P -0.04%, DOW +0.04%, NASDAQ +0.05%.
BILL GATES SURPASSED JEFF BEZOS AS THE RICHEST MAN IN THE WORLD. He is now worth $110 Billion dollars while Jeff is worth $109 Billion dollars. MSFT stock has jumped 48% so far this year. 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,  Viacom Inc. (USD) 2.25% 2/4/2022  made analysts’ ‘Conviction Buy’ list. (See the chart below for Viacom Inc. bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   CVS Health Corp. 5.05% 3/25/2048 + 1.0%
  Wells Fargo & Co. 3% 2/19/2025 + 0.0%
  GE Capital Intl. Funding Co. 4.418% 11/15/2035 + 0.1%
–   CNH Industrial NV 3.85% 11/15/2027 -0.2%
  State Street Corp. 1.95% 5/19/2021 -0.1%
  CVS Health Corp. 3.7% 3/9/2023 -0.1%
Prudential Financial Inc.   VAR% 5/15/2045
CVS Health Corp.   5.05% 3/25/2048
Daimler Chrysler North American Hldg   8.5% 1/18/2031
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.16% 0.34% 0.64% 1.13% 5.90% 6.49%
Mining 0.29% 0.53% 0.19% 0.16% 11.84% 13.11%
Construction 0.32% 0.51% 0.19% 0.15% 9.63% 10.51%
Manufacturing 0.28% 0.60% 0.50% 0.52% 11.16% 12.15%
Transportion, Communication, Electric/Gas 0.40% 0.69% 0.39% -0.06% 13.82% 15.69%
Wholesale 0.23% 0.57% 0.89% 1.35% 13.28% 13.29%
Retail 0.30% 0.65% 0.38% 0.43% 12.41% 13.54%
Finance, Insurance, Real-Estate 0.22% 0.44% 0.51% 0.63% 9.76% 10.98%
Services 0.30% 0.59% 0.33% 0.44% 11.06% 12.51%
Public Administration 0.12% 0.23% 0.09% 0.16% 4.60% 6.35%
Energy 0.30% 0.53% 0.23% 0.05% 12.19% 13.34%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. National Bank of Canada (USD) 0% 11/28/2059 (11/18/2019): 50MM Senior Unsecured Notes, Price at Issuance 100, Yielding 0%.
Additional Commentary

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)
Export Credit Bank of Turkey (5Y Sen USD CR14)
SuperValu Inc. (5Y Sen USD XR14)

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 34 bp (basis points), as of 11/18/19
  • Net positive capital flows into high-yield ETFs & mutual funds

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