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North American Bond Research – November 21, 2019
Posted on November 21, 2019|
HIGH YIELD BOND RESEARCH
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November 21, 2019
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Bond Markets
FALTERING US/CHINA PHASE 1 TRADE TALKS CONTINUED TO KNOCK DOWN STOCKS. China invited US trade representatives to China next week. China was angry about the Hong Kong Human rights bill that was passed by Congress. The 10-year note lost 2.2 basis points. S&P -0.16%, DOW -0.2%, NASDAQ -0.24%.
FIONA HILL TESTIFIED TODAY ALONG WITH DAVID HILL. She warned that the Russian security force plans to disrupt American elections in 2020 and suggested that they may indeed try to influence UK’s December vote. ADI proprietary index data showed a net yield increment for high-grade versus high-yield bonds. High-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 | ||||||||||||||||||
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Intelsat Jackson Hldg SA 8.5% 10/15/2024 144A Quad Graphics Inc. 7% 5/1/2022 Hertz Corp. 6% 1/15/2028 144A |
| Industry Returns Tracker | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| New Issues | Forward Calendar |
|---|---|
| 1. Diamondback Energy Inc. (USD) 2.875% 12/1/2024 (11/20/2019): 1000MM Senior Unsecured Notes, Price at Issuance 99.959, Yielding 2.88%.
2. Mattamy Group (USD) 5.25% 12/15/2027 144A (11/20/2019): 450MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.25%. 3. Gates Global LLC (USD) 6.25% 1/15/2026 144A (11/20/2019): 568MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.25%. |
1. Qmax Financial Holdings Inc.: $225MM, Expected 4th Quarter 2019
2. Diamondback Energy Inc.: High-yield notes, Expected Q4 2019 3. Presidio Inc.: $1.775B high yield bonds, 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.
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) Weatherford International LTD (5Y Sen USD MR14) Hovnanian Enterprises Inc. (5Y Sen USD MR14) |
Ghana, Republic of (5Y Sen USD CR14) Road King Infrastructure LTD (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:
- 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 11/21/19
- Net negative capital flows into high-yield ETFs & mutual funds
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INVESTMENT GRADE BOND RESEARCH
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November 21, 2019
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Bond Markets
FALTERING US/CHINA PHASE 1 TRADE TALKS CONTINUED TO KNOCK DOWN STOCKS. China invited US trade representatives to China next week. China was angry about the Hong Kong Human rights bill that was passed by Congress. The 10-year note lost 2.2 basis points. S&P -0.16%, DOW -0.2%, NASDAQ -0.24%.
FIONA HILL TESTIFIED TODAY ALONG WITH DAVID HILL. She warned that the Russian security force plans to disrupt American elections in 2020 and suggested that they may indeed try to influence UK’s December vote. ADI proprietary index data showed a net yield increment for high-grade versus high-yield bonds. High-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 | ||||||||||||||||||
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CVS Health Corp. 5.05% 3/25/2048 Abbvie Inc. 4.05% 11/21/2039 144A Halliburton Co. 5% 11/15/2045 |
| Industry Returns Tracker | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| New Issues | New Issues [Continued] |
|---|---|
| 1. Raza Development Fund, Inc. (USD) 3.534% 7/1/2034 (11/20/2019): 50MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.53%.
2. Diamondback Energy Inc. (USD) 3.25% 12/1/2026 (11/20/2019): 800MM Senior Unsecured Notes, Price at Issuance 99.858, Yielding 3.27%. 3. California Institute of Technology (USD) 3.65% 9/1/2119 (11/20/2019): 500MM Senior Unsecured Notes, Price at Issuance 99.747, Yielding 3.66%. |
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.
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) Road King Infrastructure LTD (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:
- 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 11/21/19
- Net positive capital flows into high-yield ETFs & mutual funds
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