Credit

USD Liquid Bonds Returns Today: -22bp For IG, -3bp For HY On Tighter Spreads, Higher Rates

Leveraged finance has been a top performer among fixed income assets in terms of returns and risk-adjusted performance this year, though the risk assessment of illiquid loans and CLOs is likely undercooked / not directly comparable to Treasuries or IG bonds

Published ET

Year-To-Date Performance Of Fixed Income Assets | Source: Credit Suisse

Year-To-Date Performance Of Fixed Income Assets | Source: Credit Suisse

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QUICK SUMMARY

  • S&P 500 Bond Index was down -0.17% today, with investment grade down -0.18% and high yield down -0.04% (YTD total return: +0.14%)
  • The iBoxx USD Liquid Investment Grade Total Return Index was down -0.222% today (Month-to-date: 0.08%; Year-to-date: -0.40%)
  • The iBoxx USD Liquid High Yield Total Return Index was down -0.032% today (Month-to-date: 0.29%; Year-to-date: 4.19%)
  • ICE BofA US Corporate Index (Investment Grade) spread to worst down -1.0 bp, now at 85.0 bp (YTD change: -13.0 bp)
  • ICE BofA US High Yield Index spread to worst down -3.0 bp, now at 317.0 bp (YTD change: -73.0 bp)
  • S&P/LSTA U.S. Leveraged Loan 100 Index up 0.02% today (YTD total return: +3.0%)
  • New issues: US$ 1.6bn in dollars and € 2.0bn in euros

IFR TOTAL VOLUMES OF USD ISSUANCE THIS WEEK

  • IG: 50 tranches for US$39.575bn, with the supply forecast for next week around US$25bn
  • HY: 16 tranches for US$9.975bn
  • ABS: US$14.82bn this week (highest of the year) + could raise over US$5.8bn next week

US CORPORATE OPTION-ADJUSTED SPREAD (OAS) BY RATING

  • AAA down by -1 bp at 48 bp
  • AA unchanged at 57 bp
  • A down by -1 bp at 71 bp
  • BBB down by -1 bp at 110 bp
  • BB down by -1 bp at 207 bp
  • B down by -5 bp at 352 bp
  • CCC down by -4 bp at 634 bp
ICE BofAML US IG & HY Spreads | Sources: ϕpost, Refinitiv dataICE BofAML US Spreads By Rating | Sources: ϕpost, Refinitiv data

CDS INDICES (mid-spreads)

  • Markit CDX.NA.IG 5Y up 0.7 bp, now at 88bp (YTD change: -2.7bp)
  • Markit CDX.NA.HY 5Y up 5.2 bp, now at 278bp (YTD change: -15.2bp)
  • Markit iTRAXX Europe up 0.4 bp, now at 45bp (YTD change: -3.1bp)
  • Markit iTRAXX Japan unchanged at 42bp (YTD change: -9.1bp)
  • Markit iTRAXX Asia Ex-Japan up 5.5 bp, now at 73bp (YTD change: +14.8bp)
CDX.NA IG & HY Credit Indices Mid Spreads | Sources: ϕpost, Refinitiv dataiTRAXX Credit Indices Mid Spreads | Sources: ϕpost, Refinitiv data

TOP BONDS MOVES IN THE PAST WEEK - USD HY

  • Issuer: Seazen Group Ltd (Shanghai, Cayman Islands) | Coupon: 6.00% | Maturity: 12/8/2024 | Rating: BB+ | ISIN: XS2215175634 | Z-spread up by 104.6 bp to 568.7 bp, with the yield to worst at 5.8% and the bond now trading down to 99.6 cents on the dollar (1Y price range: 99.6-105.8).
  • Issuer: Wynn Las Vegas LLC (Las Vegas, Nevada (US)) | Coupon: 5.50% | Maturity: 1/3/2025 | Rating: B+ | ISIN: USU98347AK05 | Z-spread up by 78.9 bp to 371.0 bp, with the yield to worst at 4.0% and the bond now trading down to 103.4 cents on the dollar (1Y price range: 101.8-108.3).
  • Issuer: Oi SA em Recuperacao Judicial (Rio de Janeiro, Brazil) | Coupon: 10.00% | Maturity: 27/7/2025 | Rating: CCC+ | ISIN: USP7354PAA23 | Z-spread up by 74.0 bp to 1,162.1 bp, with the yield to worst at 11.6% and the bond now trading down to 94.0 cents on the dollar (1Y price range: 93.8-107.0).
  • Issuer: AAG FH LP | Coupon: 9.75% | Maturity: 15/7/2024 | Rating: B- | ISIN: USC33027AA82 | Z-spread up by 44.9 bp to 1,011.5 bp, with the yield to worst at 10.2% and the bond now trading down to 97.9 cents on the dollar (1Y price range: 96.0-99.8).
  • Issuer: Kuwait Projects Company SPC Ltd (Dubai, United Arab Emirates) | Coupon: 4.50% | Maturity: 23/2/2027 | Rating: BB- | ISIN: XS1567906059 | Z-spread up by 42.4 bp to 461.4 bp, with the yield to worst at 5.4% and the bond now trading down to 95.2 cents on the dollar (1Y price range: 95.0-104.6).
  • Issuer: Taylor Morrison Communities Inc (Scottsdale, Arizona (US)) | Coupon: 5.88% | Maturity: 15/6/2027 | Rating: BB- | ISIN: USU8760NAA73 | Z-spread down by 40.5 bp to 181.2 bp, with the yield to worst at 2.6% and the bond now trading up to 115.5 cents on the dollar (1Y price range: 108.5-115.8).
  • Issuer: Rolls-Royce PLC (BIRMINGHAM, United Kingdom) | Coupon: 5.75% | Maturity: 15/10/2027 | Rating: BB- | ISIN: USG76237AC37 | Z-spread down by 42.2 bp to 268.6 bp (CDS basis: -50.2bp), with the yield to worst at 3.5% and the bond now trading up to 110.5 cents on the dollar (1Y price range: 104.5-110.8).
  • Issuer: Petroleos Mexicanos (MIGUEL HIDALGO, Mexico) | Coupon: 6.88% | Maturity: 16/10/2025 | Rating: BB- | ISIN: USP7S08VBZ31 | Z-spread down by 44.6 bp to 304.3 bp (CDS basis: -27.2bp), with the yield to worst at 3.7% and the bond now trading up to 111.2 cents on the dollar (1Y price range: 107.8-111.8).
  • Issuer: Sappi Papier Holding GmbH (Gratkorn, Austria) | Coupon: 7.50% | Maturity: 15/6/2032 | Rating: B+ | ISIN: XS0149581935 | Z-spread down by 49.0 bp to 477.2 bp, with the yield to worst at 5.7% and the bond now trading up to 111.5 cents on the dollar (1Y price range: 97.8-111.5).
  • Issuer: MHP Lux SA (Luxembourg, Luxembourg) | Coupon: 6.95% | Maturity: 3/4/2026 | Rating: B | ISIN: XS1713469911 | Z-spread down by 61.0 bp to 399.8 bp, with the yield to worst at 4.6% and the bond now trading up to 108.1 cents on the dollar (1Y price range: 99.5-109.8).
  • Issuer: YPF SA (Buenos Aires, Argentina) | Coupon: 8.50% | Maturity: 27/6/2029 | Rating: CCC- | ISIN: USP989MJBP50 | Z-spread down by 67.6 bp to 1,139.5 bp, with the yield to worst at 12.3% and the bond now trading up to 80.3 cents on the dollar (1Y price range: 59.9-81.0).
  • Issuer: WeWork Companies Inc (New York City, New York (US)) | Coupon: 7.88% | Maturity: 1/5/2025 | Rating: CC | ISIN: USU96217AA99 | Z-spread down by 70.2 bp to 716.3 bp, with the yield to worst at 7.4% and the bond now trading up to 100.5 cents on the dollar (1Y price range: 67.5-104.8).
  • Issuer: EnLink Midstream LLC (Dallas, Texas (US)) | Coupon: 5.63% | Maturity: 15/1/2028 | Rating: BB | ISIN: USU26790AB82 | Z-spread down by 79.3 bp to 295.9 bp, with the yield to worst at 3.8% and the bond now trading up to 108.3 cents on the dollar (1Y price range: 96.8-108.3).
  • Issuer: Southeast Supply Header LLC (Houston, Texas (US)) | Coupon: 4.25% | Maturity: 15/6/2024 | Rating: BB- | ISIN: USU83854AB29 | Z-spread down by 85.0 bp to 257.0 bp, with the yield to worst at 2.6% and the bond now trading up to 102.9 cents on the dollar (1Y price range: 98.4-103.0).

TOP BONDS MOVES IN THE PAST WEEK - EUR HY

  • Issuer: Adler Group SA (Senningerberg, Luxembourg) | Coupon: 3.25% | Maturity: 5/8/2025 | Rating: BB+ | ISIN: XS2010029663 | Z-spread up by 161.1 bp to 427.9 bp, with the yield to worst at 3.8% and the bond now trading down to 97.5 cents on the dollar (1Y price range: 97.5-105.4).
  • Issuer: Autostrade per l'Italia SpA (Rome, Italy) | Coupon: 2.00% | Maturity: 15/1/2030 | Rating: BB- | ISIN: XS2278566299 | Z-spread down by 21.4 bp to 122.3 bp (CDS basis: 5.0bp), with the yield to worst at 1.1% and the bond now trading up to 106.2 cents on the dollar (1Y price range: 98.1-106.4).
  • Issuer: Netflix Inc (Los Gatos, California (US)) | Coupon: 3.63% | Maturity: 15/6/2030 | Rating: BB+ | ISIN: XS2072829794 | Z-spread down by 21.5 bp to 106.4 bp, with the yield to worst at 0.9% and the bond now trading up to 121.0 cents on the dollar (1Y price range: 112.9-121.8).
  • Issuer: SoftBank Group Corp (Minato-Ku, Japan) | Coupon: 2.88% | Maturity: 6/1/2027 | Rating: BB+ | ISIN: XS2361254597 | Z-spread down by 23.6 bp to 349.9 bp, with the yield to worst at 3.1% and the bond now trading up to 98.2 cents on the dollar (1Y price range: 96.2-100.0).
  • Issuer: International Consolidated Airlines Group SA (London, Spain) | Coupon: 1.50% | Maturity: 4/7/2027 | Rating: B+ | ISIN: XS2020581752 | Z-spread down by 28.5 bp to 341.5 bp, with the yield to worst at 3.1% and the bond now trading up to 91.0 cents on the dollar (1Y price range: 84.0-92.1).
  • Issuer: Thyssenkrupp AG (Essen, Germany) | Coupon: 2.50% | Maturity: 25/2/2025 | Rating: B+ | ISIN: DE000A14J587 | Z-spread down by 34.0 bp to 174.6 bp (CDS basis: -9.8bp), with the yield to worst at 1.3% and the bond now trading up to 103.7 cents on the dollar (1Y price range: 100.1-103.9).
  • Issuer: Standard Industries Inc (Parsippany, New Jersey (US)) | Coupon: 2.25% | Maturity: 21/11/2026 | Rating: BB- | ISIN: XS2080766475 | Z-spread down by 35.6 bp to 258.8 bp, with the yield to worst at 2.2% and the bond now trading up to 99.5 cents on the dollar (1Y price range: 96.7-102.9).
  • Issuer: Deutsche Lufthansa AG (Cologne, Germany) | Coupon: 3.00% | Maturity: 29/5/2026 | Rating: BB- | ISIN: XS2265369657 | Z-spread down by 41.5 bp to 276.3 bp (CDS basis: -60.3bp), with the yield to worst at 2.3% and the bond now trading up to 102.1 cents on the dollar (1Y price range: 95.7-102.5).
  • Issuer: Ashland Services BV (Zwijndrecht, Netherlands) | Coupon: 2.00% | Maturity: 30/1/2028 | Rating: BB+ | ISIN: XS2103218538 | Z-spread down by 46.0 bp to 132.8 bp, with the yield to worst at 1.1% and the bond now trading up to 104.9 cents on the dollar (1Y price range: 98.4-105.3).
  • Issuer: Petroleos Mexicanos (Miguel Hidalgo, Mexico) | Coupon: 2.75% | Maturity: 21/4/2027 | Rating: BB- | ISIN: XS1172951508 | Z-spread down by 47.0 bp to 392.2 bp (CDS basis: -65.4bp), with the yield to worst at 3.6% and the bond now trading up to 95.3 cents on the dollar (1Y price range: 89.3-95.4).

USD BOND ISSUES

  • PRA Group Inc (Service - Other | Norfolk, Virginia, United States | Rating: NR): US$350m Senior Note (US69354NAD84), fixed rate (5.00% coupon) maturing on 1 October 2029, priced at 100.00 (original spread of 391 bp), callable (8nc3)
  • Pactiv Evergreen Group Issuer Inc (Financial - Other | Auckland, United States | Rating: B+): US$500m Note (US69527AAA43), fixed rate (4.38% coupon) maturing on 15 October 2028, priced at 100.00 (original spread of 321 bp), callable (7nc3)
  • Banco de Credito e Inversiones (Banking | Las Condes, Chile | Rating: A-): US$133m Senior Note (XS2384719667), fixed rate (1.89% coupon) maturing on 24 September 2026, priced at 100.00, non callable
  • SWF Escrow Issuer Corp (Financial - Other | Rating: CCC): US$625m Senior Note (USU8682VAA45), fixed rate (6.50% coupon) maturing on 1 October 2029, priced at 100.00 (original spread of 527 bp), callable (8nc3)

EUR BOND ISSUES

  • HSBC Holdings PLC (Banking | London, United Kingdom | Rating: A-): €1,000m Senior Note (XS2388491289), fixed rate (0.64% coupon) maturing on 24 September 2029, priced at 100.00 (original spread of 115 bp), non callable
  • HSBC Holdings PLC (Banking | London, United Kingdom | Rating: A-): €500m Senior Note (XS2388490802), floating rate (EU03MLIB + 100.0 bp) maturing on 24 September 2026, priced at 102.03, callable (5nc4)
  • KfW (Agency | Frankfurt, Hessen, Germany | Rating: AAA): €500m Inhaberschuldverschreibung (DE000A3E5LY3) zero coupon maturing on 1 October 2033, priced at 100.00, callable (12nc1)

NEW LOANS

  • Summit Midstream Partners, signed a US$ 500m Revolving Credit Facility, to be used for general corporate purposes. It matures on 03/27/26 and initial pricing is set at LIBOR +325bps
  • Starbucks Corp (BBB+), signed a US$ 3,000m Revolving Credit Facility, to be used for general corporate purposes. It matures on 09/17/26 and initial pricing is set at LIBOR +102.5bps
  • Carlyle Ppty Invs L.L.C., signed a US$ 425m Term Loan, to be used for general corporate purposes. It matures on 09/30/23 and initial pricing is set at LIBOR +175bps
  • InvenTrust Properties Corp, signed a US$ 200m Term Loan A, to be used for general corporate purposes. It matures on 03/30/27.
  • InvenTrust Properties Corp, signed a US$ 200m Term Loan A, to be used for general corporate purposes. It matures on 09/30/26 and initial pricing is set at LIBOR +105bps
  • Canadian Canola Growers Assoc, signed a US$ 2,000m Revolving Credit Facility, to be used for general corporate purposes. It matures on 09/30/22.
  • Stericycle Inc (BB-), signed a US$ 200m Term Loan A, to be used for general corporate purposes. It matures on 09/27/26 and initial pricing is set at LIBOR +150.000bps
  • Stericycle Inc (BB-), signed a US$ 1,200m Revolving Credit Facility, to be used for general corporate purposes. It matures on 09/27/26 and initial pricing is set at LIBOR +130bps
  • NSA OP LP, signed a US$ 125m Term Loan, to be used for general corporate purposes. It matures on 03/15/27.
  • NSA OP LP, signed a US$ 600m Revolving Credit Facility, to be used for general corporate purposes. It matures on 01/29/26 and initial pricing is set at LIBOR +130.000bps
  • EPR Properties (BB+), signed a US$ 1,000m Revolving Credit Facility, to be used for general corporate purposes. It matures on 09/30/25 and initial pricing is set at LIBOR +120bps
  • Physicians (BBB), signed a US$ 250m Term Loan A, to be used for general corporate purposes. It matures on 06/10/23 and initial pricing is set at LIBOR +100.000bps
  • Physicians (BBB), signed a US$ 1,000m Revolving Credit Facility, to be used for general corporate purposes. It matures on 09/30/25 and initial pricing is set at LIBOR +105bps
  • Performance Food Group Co, signed a US$ 165m Term Loan, to be used for general corporate purposes. It matures on 09/30/26 and initial pricing is set at LIBOR +200bps
  • Performance Food Group Co, signed a US$ 3,835m Revolving Credit Facility, to be used for general corporate purposes. It matures on 09/30/26 and initial pricing is set at LIBOR +100bps
  • Hologic Inc (BB), signed a US$ 1,500m Term Loan A, to be used for general corporate purposes. It matures on 09/27/26 and initial pricing is set at LIBOR +100bps
  • Hologic Inc (BB), signed a US$ 2,000m Revolving Credit Facility, to be used for general corporate purposes. It matures on 09/27/26 and initial pricing is set at LIBOR +100bps

NEW ISSUES IN SECURITIZED CREDIT

  • Prime Finance PFP 2021-8 Ltd issued a floating-rate CLO in 6 tranches, for a total of US$ 947 m. Highest-rated tranche offering a spread over the floating rate of 100bp, and the lowest-rated tranche a spread of 250bp. Bookrunners: Goldman Sachs & Co, Morgan Stanley International Ltd, JP Morgan & Co Inc, Citigroup Global Markets Inc, Wells Fargo Securities LLC