ProShares USD Covered Bond ETFNYSEARCA
Tue, Nov. 1, 3:32 AM
- A surge of blockbuster takeovers and buyouts has provided renewed ammunition for the corporate bond market, supplying fresh kindling in what is already set to be a record year of debt issuance.
- The backlog of M&A that had yet to be financed slid to $246B at the end of September from more than $900B in late 2015, according to BofA Merrill Lynch, but that figure has climbed 87% to $460B following the recent string of deal announcements.
- ETFs: LQD, VCSH, VCIT, VCLT, CORP, CSJ, CIU, CSI, CRED, IGI, LWC, SCPB, CLY, ITR, BSCH, IGHG, QLTA, BSCG, BSCI, BSCK, BSCJ, IBCE, SLQD, LQDH, COBO, FCOR, IBCC, IBDC, CBND, BSCL, BSCO, IBDD, IBDF, IBDB, IBDH, LDRI, IBDQ, SKOR, BSCM, BSCN, BSCP, IBCD, IBDN, IGIH, BSCQ, IBDK, IBDM, CLYH, IBDJ, IBDL, IBDO, IBDP, IBDR, SFIG, WFIG
Thu, Oct. 20, 4:16 AM
- In a novel initiative, Sprint (NYSE:S) is set to issue $3.5B in five-year bonds that are backed by its wireless spectrum, which the telecom operator values at $16.4B.
- Investors seem to like the idea, with orders hitting $30B.
- The first-of-its-kind deal will allow Sprint to slash its borrowing costs. The paper is expected to yield 3.5% and the telecom provider plans to use the money to repay maturing debt. This could cut its financing costs and boost cash flows by an estimated $200M a year.
- The debt is receiving investment grade status from Fitch and Moody’s despite Sprint itself being rated as junk.
- ETFs: LQD, VCIT, CORP, CIU, CSI, CRED, ITR, QLTA, COBO, FCOR, CBND, SKOR, IGIH, WFIG
Mon, Sep. 12, 3:38 PM
- With corporate bond sales this year now having topped $1T, debt at non-financial U.S. companies has risen to 2.4x their collective earnings, according to a report from Morgan Stanley. The leverage ratio has been on a particularly steep rise over the past five quarters as debt moves higher alongside declining earnings.
- In 2010, the ratio stood at 1.7x.
- "The investment-grade 'safe' part of the market is becoming the most dangerous," says AllianceBernstein's Ashish Shah. "There are so little returns out there. People are crowding into whatever they can."
- Of most concern is that leverage is climbing in a growing economy. History says leverage tends to rise most in a recession. The upshot: U.S. corporates are especially exposed to a business downturn.
- On the plus side, though, are those low interest rates, meaning high levels of debt don't necessarily mean especially high levels of debt service. The same Morgan Stanley report says annual EBITDA is nearly 10x interest payments (though that number is declining).
- ETFs: LQD, CORP, CSI, CRED, QLTA, COBO, FCOR, CBND, IGIH, WFIG
Thu, Sep. 1, 9:15 AM
- Investment-grade corporate bond sales of $962M thus far this year are expected to top $1T this month, making for the fifth consecutive year above that level.
- The sales come amid strong demand by investors - this year in particular, with IG debt higher by 9.49% in 2016 after losing 0.7% in 2015.
- Meanwhile, the extra yield investors demand over Treasurys has fallen to 1.35% versus 2.15% in February. The record-low of 0.97% was hit in June 2014.
- “Supply tends to follow demand so we expect robust issuance heading into the fall," says Wells Fargo credit strategist Nathaniel Rosenbaum. Indeed.
- ETFs: LQD, CORP, CSI, CRED, QLTA, COBO, QLTB, FCOR, CBND, IGS, IGU, IGIH, WFIG
Tue, Jul. 5, 3:35 PM
- U.S. corporate bonds represent just 12% of all investment-grade debt outstanding globally, but account for a full 33% of investment-grade yield income, according to BAML's Hans Mikkelsen. A year ago, they represented 23% of all yield income; five years ago, 13%.
- Though yields have fallen sharply this year, rates on 7-10 year notes of high-quality U.S. companies are still 3.14%, positively towering over the 1.36% offered by 10-year Treasurys.
- It's good for businesses which are able to borrow at sweet rates maybe to invest, but more likely it seems, to boost buybacks.
- Possibly lifting the appeal of U.S. IG corporates even more is the ECB's recent start of buying European corporate paper, which should drive those yields even lower. Another boon? The Bank of Japan might move into corporate bonds as its share of the JGB market rises too high.
- ETFs: LQD, CORP, CSI, CRED, QLTA, COBO, QLTB, FCOR, CBND, IGS, IGU, IGIH, WFIG
Mon, Mar. 21, 3:27 PM
- Updating its global asset allocation recommendations, Citi Private Bank moves IG corporate bonds to "very overweight" - the only asset class out of 21 receiving the honor of such a high rating.
- "With U.S. yields near 5% for long maturities, and half the historical average volatility of equities, the sector seems historically attractive as our asset allocation moves higher in capital structure and credit quality," writes Steven Wieting, global chief investment strategist.
- Alongside the boost in IG corporate debt, the team cut exposure to equities to neutral, raised cash to overweight, and boosted Latin American debt as well.
- ETFs: LQD, VCLT, VCIT, CORP, CIU, CSI, CRED, LWC, CLY, ITR, PICB, IBND, QLTA, COBO, FCOR, IGS, CBND, QLTB, IGU, SKOR
Nov. 11, 2015, 11:40 AM
- Large U.S. banks reported holding negative $1.4B of investment-grade corporate bonds for the week ended Oct. 28, according to the FRBNY - meaning primary dealers have pledged to sell more bonds then they will buy.
- It's the first time corporate bond inventories have turned negative since the Fed started reporting this paper separately in April 2013, according to Goldman Sachs.
- Those worried about lack of bond market liquidity will no doubt seize on this news as yet another sign of worry. Typically, banks held more than enough inventory, but new capital and leverage rules make it more costly to do. Some lenders have exited parts of the business completely.
- Get used to it, says Goldman's Charles Himmelberg. Low market liquidity is the "new normal" for corporate bonds.
- Source: WSJ
- ETFs: LQD, VCLT, CORP, CSI, CRED, LWC, CLY, QLTA, FCOR, IGS, COBO, CBND, QLTB, IGU
Sep. 10, 2015, 4:12 AM
- Companies raised $28B of investment-grade bonds in U.S. markets yesterday as the corporate-debt market roared back to life after a three-week hiatus that was partly due to worries about China.
- Nineteen companies issued debt, including Gilead Sciences (NASDAQ:GILD) with a $10B deal, home-improvement retailer Lowe’s Cos. (NYSE:LOW) and hotelier Marriott International (NASDAQ:MAR).
- Overall, firms have sold $1.2T worth of new debt in the U.S. this year, including junk-rated paper, putting the market on course to set a record for a fourth consecutive year.
- ETFs: LQD, VCSH, VCIT, VCLT, CORP, CSJ, CIU, CSI, CRED, LWC, CLY, SCPB, ITR, IGHG, QLTA, FCOR, IGS, COBO, SLQD, LQDH, QLTB, CBND, LDRI, IGU, SKOR
Sep. 2, 2015, 2:57 PM
- “We’ve seen new issuance evaporate at the moment,” says Roger Bayston, director of fixed income at Franklin Templeton. Globally, investment-grade bond issuance last month was $72.24B, according to Dealogic, down from $97B a year earlier.
- The slowdown is even more dramatic when considering volume YTD of $1.21T is the highest level on record.
- “It’s not that the market is closed, but people continue to look for the right window,” says JPMorgan's Huw Richards.
- On the rise, however, are concessions, or the extra yield borrowers pay to attract lenders. They averages 12 basis points from May-June vs. 4 bps in the same period in 2014.
- ETFs: LQD, CORP, CSI, CRED, PICB, IBND, QLTA, FCOR, IGS, COBO, CBND, QLTB, IGU, SUBD
Jun. 4, 2015, 11:01 AM
- For all the talk of Russia's economic woes, the corporate debt of that country has far outperformed that of the U.S. this year. Noting that, Deutsche Bank strategists Oleg Melentyev and Daniel Sorid suggest the tide of the U.S. corporate debt boom could be turning.
- Helped by a flood of retail money into investment-grade bond funds, the size of the corporate debt market has risen to $7.8T from $5.4T in 2009, fueling a boom in buybacks and EPS in an otherwise middling economic environment.
- The result is more levered corporate balance sheets (even stripping out oil companies) just at the time when the Fed is getting set to hike interest rates.
- "As the Fed prepares the market for the end of the period of zero short-term rates, we may be approaching a reassessment of just how much leverage is appropriate given the overall market compensation," conclude the duo.
- Source: Bloomberg
- ETFs: LQD, VCIT, VCLT, CORP, CIU, CSI, CRED, LWC, CLY, ITR, IGHG, QLTA, FCOR, IGS, COBO, LQDH, QLTB, CBND, IGU, SKOR
May 4, 2015, 4:46 AM
- U.S. companies have issued a record $39B of bonds in 2015 that mature in more than three decades, more than five times the amount sold in the same period last year, according to data compiled by Bloomberg.
- Oracle joined the fold this past Tuesday, selling $1.25B of securities due in 2055. Another notable is Microsoft, which sold its first 40-year bond in February.
- Treasurers are embracing what may be their last opportunity to lock in cheap long-term funding costs before the Fed raises rates, while investors are snapping up the longer-dated securities because they offer a higher yield over shorter-term debt.
- ETFs: HYG, JNK, LQD, HYLD, HYS, VCSH, SJNK, VCIT, VCLT, CWB, CORP, SJB, CSJ, BSJF, CIU, ANGL, BSJG, HYHG, CRED, LWC, BSJI, HYLS, CLY, SCPB, UJB, ITR, BSCF, BSCH, IGHG, WYDE, XOVR, BSJH, QLTA, THHY, HYZD, QLTC, BSCI, BSCG, SHYG, BSJJ, HYND, HYGH, BSJK, IBCE, FCOR, TYTE, IGS, COBO, BSCK, LQDH, SLQD, QLTB, IBCB, BSCJ, CBND, IBCC, BSCL, IBDB, LDRI, IBDD, IBDF, IGU, BSCM, IBDA, IBCD, IBDC, IBDH, SKOR, BSCO, BSCN, BSJM, IBDK, BSJL, IBDO, IBDN, IBDP, IBDQ, IBDM, IBDJ
May 1, 2015, 10:56 AM
- Junk bonds have returned a total of 3.8% year-to-date, according to BAML vs. 1.7% for investment-grade and 1.3% for Treasurys. In April, high-yield had a total return of 1.2%, while both investment-grade and Treasury paper posted negative returns.
- As of yesterday, the spread between high-yield and Treasurys was 459 basis points. At the start of the year, it was 504 bps. The spread has likely narrowed even more today as Treasurys tumble in price, but high-yield edges higher. Both JNK and HYG are up 0.1%, while TLT is down 1.3%.
- ETFs: HYG, JNK, LQD, HYLD, CORP, SJB, ANGL, CRED, HYLS, UJB, XOVR, QLTA, QLTC, FCOR, IGS, COBO, QLTB, CBND, IGU
Apr. 7, 2015, 1:09 PM
- With the Fed threatening to take away the punch bowl, American companies have found a friend in the ECB, whose QE has made borrowing across the pond far less expensive than doing it here, writes Lisa Abramowicz.
- Yields on investment-grade corporates in Europe have dipped all the way to 0.99% vs. 2.9% in the U.S., according to BAML. U.S. companies can save money even if they pay for expensive currency hedges. Consequently, roughly 65% of the record €60B of euro-denominated bonds sold in March (a record) came from overseas companies.
- Junk-rated credits are also looking to the Continent, where yields on euro-denominated high-yield bonds of 4.3% are about 220 basis points lower than the States.
- ETFs: HYG, JNK, LQD, HYLD, CORP, SJB, IHY, CRED, ANGL, HYLS, PGHY, UJB, HYXU, PICB, IBND, XOVR, QLTA, QLTC, IJNK, COBO, IGS, FCOR, CBND, QLTB, IGU, SUBD
Mar. 26, 2015, 8:14 AM
- Investment-grade and junk-rated companies combined have sold $438B of new bonds YTD, according to Dealogic, topping the previous record of $384B in 2013. Bond sales related to M&A of $87B are also at a record YTD.
- Corporate treasurers no doubt are pushing out as much debt as possible to take advantage of low rates, but they're finding plenty of willing buyers.
- “I can’t see anything on the radar that’s going to slow things down materially,” says one fixed-income manager.
- ETFs: HYG, JNK, LQD, HYLD, CORP, SJB, CRED, ANGL, HYLS, UJB, XOVR, QLTA, QLTC, COBO, IGS, CBND, FCOR, QLTB, IGU
Dec. 2, 2014, 5:09 AM
- With a $17B issuance from Medtronic (NYSE:MDT), U.S. corporate bond sales broke an annual record yesterday, pushing offerings for 2014 past the $1.5T mark.
- The surge in sales has been boosted by record-low borrowing costs, prompting companies to lock in on the low rates.
- ETFs: HYG, JNK, LQD, HYLD, HYS, VCSH, SJNK, VCIT, VCLT, CORP, CSJ, SJB, BSJF, CIU, HYHG, BSJE, BSJG, CRED, ANGL, LWC, BSJI, HYLS, SCPB, CLY, WYDE, BSCF, BSCE, ITR, BSCH, UJB, HYZD, XOVR, IGHG, QLTA, THHY, BSCG, BSJH, BSCI, QLTC, SHYG, BSJJ, HYGH, HYND, TYTE, BSJK, IBCE, COBO, IGS, SLQD, BSCK, CBND, FCOR, LQDH, IBCB, LDRI, QLTB, BSCJ, IBCC, BSCM, IBDH, IBDF, BSCL, IBDD, IGU, IBDC, BSCN, IBDA, IBDB, IBCD, BSCO, SKOR, BSJL, BSJM
Oct. 9, 2014, 1:31 PM
- The Fidelity Total Bond ETF (Pending:FBND), the Fidelity Limited Term Bond ETF (Pending:FLTB) and the Fidelity Corporate Bond ETF (Pending:FCOR), the first actively managed bond exchange-traded funds from Fidelity Investments, began trading this morning.
- Fidelity's timing could not have been better, with many investors, shaken by Bill Gross's departure from PIMCO, may be searching the market for new investment options.
- “I would say the timing of our launch is fortunate; however, this is part of a really well-thought-out long-term strategy around ETFs,” said Scott E. Couto, president of Fidelity Financial Advisor Solutions.
- Other total market ETFs: AGG, BOND, BND, SCHZ, LAG, SAGG, GBF, IUSB
- Other short term ETFs: BSV, ISTB, MINC
- Other corporate bond ETFs: LQD, CORP, CRED, QLTA, IGS, COBO, CBND, QLTB, IGU