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North American Bond Research – November 7, 2019

Posted on November 7, 2019
HIGH YIELD BOND RESEARCH
November 7, 2019
Bond Markets

TOYOTA ANNOUNCED A $1.8 BILLION DOLLAR BUYBACK, following exceptionally strong quarter results. Other vehicle manufacturers are due out soon. The 10-year note was unchanged. The 10-year notes unchanged. S&P +0.27%, DOW +0.01%, NASDAQ +0.09%.
STOCKS EDGED DOWN AND BOND YIELDS EDGED UP. Risk rally in stocks seemed to be ending. 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, Pacific Gas & Electric Co. (USD) 3.85% 11/15/2023 made analysts’ ‘Conviction Buy’ list. (See the chart below for Pacific Gas & Electric Co bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Teva Pharmaceutical Industries LTD 2.2% 7/21/2021 + 0.7%
  CBL & Associates LP 5.95% 12/15/2026 + 1.0%
–   Sabine Pass Liquefaction LLC 5.625% 2/1/2021 (1) -0.0%
  AerCap Ireland Capital LTD 4.625% 10/30/2020 -0.1%
Teva Pharmaceutical Industries LTD   2.2% 7/21/2021
Teva Pharmaceuticals Fin BV   6.75% 3/1/2028
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.34% 0.39% 1.12% 4.21% 17.79% 17.84%
Mining -0.06% 0.27% 0.64% -0.98% 5.68% 1.00%
Construction -0.06% -0.10% 1.01% 3.20% 15.61% 14.16%
Manufacturing 0.11% 0.26% 1.27% 2.83% 11.97% 9.93%
Transportion, Communication, Electric/Gas 0.01% 0.12% 0.32% 2.01% 13.74% 11.10%
Wholesale 0.08% -0.05% 0.65% 1.82% 12.40% 9.80%
Retail 0.02% -0.02% 1.29% 3.86% 15.55% 12.61%
Finance, Insurance, Real-Estate 0.09% 0.12% 0.98% 2.72% 13.85% 11.42%
Services 0.06% 0.09% 0.98% 2.56% 12.22% 10.27%
Public Administration 0.22% 0.12% 0.97% 2.24% 14.06% 15.52%
Energy 0.02% 0.30% 0.02% -0.49% 6.63% 2.39%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Ard Finance SA (USD) 6.5% 6/30/2027 144A (11/06/2019): 1130MM Secured Notes, Price at Issuance 100, Yielding 6.5%.

2. Ard Finance SA (USD) 6.5% 6/30/2027 Reg S (11/06/2019): 1130MM Secured Notes, Price at Issuance 100, Yielding 6.5%.

1. Qmax Financial Holdings Inc.: $225MM, Expected 4th Quarter 2019

2. Presidio Inc.: $1.775B high yield bonds, Expected 4th Quarter 2019

Additional Commentary

NEW ISSUANCE WATCH: on 11/05/19 participants welcome a $500MM new corporate-bond offering by
MSCI Inc. The most recent data showed a money flowed out of ETF/mutual funds for the week ended 11/01/2019, with a net inflow of $940 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 XR14)
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 35 bp (basis points), as of 11/07/19
  • 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 7, 2019
Bond Markets

TOYOTA ANNOUNCED A $1.8 BILLION DOLLAR BUYBACK, following exceptionally strong quarter results. Other vehicle manufacturers are due out soon. The 10-year notes unchanged. S&P +0.27%, DOW +0.01%, NASDAQ +0.09%.
STOCKS EDGED DOWN AND BOND YIELDS EDGED UP. Risk rally in stocks seemed to be ending. 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, Pacific Gas & Electric Co. (USD) 3.85% 11/15/2023 made analysts’ ‘Conviction Buy’ list. (See the chart below for Pacific Gas & Electric Co bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Royal Bank of Canada 2.15% 10/26/2020 + 0.0%
  Goldman Sachs Group Inc. 5.75% 1/24/2022 + 0.0%
–   CVS Health Corp. 5.05% 3/25/2048 -1.0%
  AT&T Inc. 4.35% 3/1/2029 -0.5%
Royal Bank of Canada   2.15% 10/26/2020
HCA Inc.   5.5% 6/15/2047
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.10% 0.12% -0.06% 0.71% 5.75% 6.47%
Mining 0.29% -0.04% -1.02% 0.79% 11.47% 12.33%
Construction 0.21% -0.08% -0.86% 0.69% 9.91% 11.21%
Manufacturing 0.25% 0.01% -0.63% 1.47% 11.28% 12.44%
Transportion, Communication, Electric/Gas 0.25% -0.06% -1.04% 1.14% 13.64% 15.76%
Wholesale 0.25% 0.06% -0.20% 1.85% 12.99% 13.27%
Retail 0.27% -0.17% -0.82% 1.46% 12.28% 13.90%
Finance, Insurance, Real-Estate 0.16% 0.05% -0.34% 1.17% 9.26% 10.67%
Services 0.24% -0.05% -0.78% 1.43% 10.74% 12.45%
Public Administration 0.13% 0.04% -0.54% 0.52% 4.46% 6.45%
Energy 0.26% -0.04% -0.99% 0.82% 12.04% 12.79%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. SBL Hldg, LLC (USD) 5.125% 11/13/2026 Reg S (11/06/2019): 400MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.13%.

2. Ventas Canada Finance LTD (CAD) 2.8% 4/12/2024 (11/06/2019): 600MM Senior Unsecured Notes, Price at Issuance 99.989, Yielding 2.8%.

Additional Commentary

NEW ISSUANCE WATCH: on 11/05/19 participants welcome a $500MM new corporate-bond offering by
Xcel Energy Inc.The most recent data showed a money flowed out of ETF/mutual funds for the week ended 11/01/2019, with a net inflow of $940 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 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:

  • 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 36 bp (basis points), as of 11/07/19
  • 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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