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North American Bond Research – November 4, 2019

Posted on November 4, 2019
HIGH YIELD BOND RESEARCH
November 4, 2019
Bond Markets

S&P 500 closed again at a record high! Bonds were mixed to lower. Trade tensions have lessened, but no deal is in print yet. The 10-year note rose 3.7 basis points. S&P +0.37%, DOW +0.42, NASDAQ +0.56%.
Mcdonalds CEO was ousted due to a disclosure that he has a consensual relationship with an employee.  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 IndicesPierre Robert
Key Gainers and Losers Volume Leaders
+   Pacific Gas & Electric Co. 6.05% 3/1/2034 + 2.1%
  Antero Resources Corp. 5% 3/1/2025 + 4.0%
  Chesapeake Energy Corp. 8% 1/15/2025 + 2.0%
–   Western Digital Corp. 4.75% 2/15/2026 -1.2%
Pacific Gas & Electric Co.   6.05% 3/1/2034
Antero Resources Corp.   5.625% 6/1/2023
California Resources Corp.   8% 12/15/2022 144A
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.08% -0.13% 1.25% 2.92% 16.91% 15.71%
Mining -0.06% -0.50% -1.36% -3.50% 5.45% 1.06%
Construction -0.04% -0.07% 1.10% 3.23% 15.27% 14.13%
Manufacturing -0.01% 0.05% 0.93% 2.20% 11.87% 10.25%
Transportion, Communication, Electric/Gas 0.01% -0.29% 0.44% 1.39% 13.12% 10.76%
Wholesale -0.11% -0.34% 0.21% 0.86% 11.75% 8.98%
Retail 0.02% -0.14% 0.77% 2.03% 15.51% 13.13%
Finance, Insurance, Real-Estate -0.07% 0.06% 0.71% 2.13% 13.68% 11.54%
Services 0.01% -0.05% 0.68% 2.40% 12.55% 10.99%
Public Administration 0.02% -0.14% 0.87% 1.84% 13.73% 14.92%
Energy -0.06% -0.35% -1.33% -2.66% 6.12% 1.90%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Silgan Holdings Inc. (USD) 4.125% 2/1/2028 144A (11/04/2019): 400MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.13%.

(None Current 11/04/2019)
1. Qmax Financial Holdings Inc.: $225MM, Expected 4th Quarter 2019

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

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)
Hertz Corp. (5Y Sen USD CR14)
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 38 bp (basis points), as of 11/04/19
  • 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 4, 2019
Bond Markets

S&P 500 closed again at a record high! Bonds were mixed to lower. Trade tensions have lessened, but no deal is in print yet. The 10-year note rose 3.7 basis points. S&P +0.37%, DOW +0.42, NASDAQ +0.56%.
Mcdonalds CEO was ousted due to a disclosure that he has a consensual relationship with an employee. 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
+   Hewlett-Packard Co. 3.6% 10/15/2020 + 0.2%
  Broadcom LTD 4.25% 4/15/2026 144A + 0.1%
–   Newell Rubbermaid Inc. 4.2% 4/1/2026 -1.7%
  GE Capital Intl. Funding Co. 4.418% 11/15/2035 -0.2%
Anheuser-Busch Inbev Worldwide Inc.   4.75% 1/23/2029
Southern Copper Corp.   5.875% 4/23/2045
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.03% 0.16% 0.35% 0.83% 5.74% 6.45%
Mining -0.13% 0.35% -0.12% 1.68% 11.89% 12.68%
Construction -0.14% 0.48% 0.25% 1.40% 8.35% 9.80%
Manufacturing -0.10% 0.46% 0.29% 2.42% 11.13% 12.26%
Transportion, Communication, Electric/Gas -0.10% 0.49% 0.13% 2.69% 13.95% 15.77%
Wholesale -0.12% 0.48% 0.50% 2.53% 13.04% 13.13%
Retail -0.15% 0.42% 0.22% 2.81% 12.63% 13.98%
Finance, Insurance, Real-Estate -0.09% 0.38% 0.34% 1.95% 9.81% 11.05%
Services -0.13% 0.32% 0.17% 2.49% 11.34% 13.10%
Public Administration -0.20% 0.13% 0.00% 0.83% 4.30% 5.92%
Energy -0.13% 0.38% -0.09% 1.77% 12.41% 13.05%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Shell International Finance BV (USD) 2% 11/7/2024 (11/04/2019): 1250MM Senior Unsecured Notes, Price at Issuance 99.716, Yielding 2.06%.

2. Caterpillar Financial Services Corp. (USD) 2.15% 11/8/2024 (11/04/2019): 500MM Senior Unsecured Notes, Price at Issuance 99.906, Yielding 2.17%.

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 CR14)
Ghana, Republic of (5Y Sen USD CR14)
Road King Infrastructure LTD (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 38 bp (basis points), as of 11/04/19
  • 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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