Mon, May 4, 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
Fri, May 1, 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
Tue, Apr. 7, 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
Thu, Mar. 26, 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
Sep. 23, 2014, 2:37 PM
- Among the changes BlackRock (BLK -0.9%) is urging in a new paper is replacing banks as the primary middlemen in the market and moving transactions to electronic markets. Another: Encouraging companies to issue debt with more standardized terms, thus cutting the complexity of the market.
- Despite years of effort by BlackRock and others to wrest control of corporate debt trading from banks, the top ten dealers still control more than 90% of trading, according to Greenwich Associates. For now, ZIRP is masking many issues, but the price gaps and scant liquidity remain.
- “These reforms would hasten the evolution from today’s outdated market structure to a modernized, ‘fit for purpose’ corporate bond market."
- ETFs: LQD, CORP, CRED, QLTA, COBO, IGS, QLTB, CBND, IGU
Sep. 19, 2014, 3:03 PM
- "This capital largely did not even exist" in the days ahead of the financial crisis," says Deutsche's head of credit strategy Oleg Melentyev. Private-equity funds have raised at least $300B to invest in credit, and are likely buyers in any selloff, he says, taking over a job that used to be performed by the banks.
- Shops like Carlyle Group, Blackstone, and KKR are among those who have diversified beyond their traditional buyout operations in part by boosting their debt investments. Recently public Ares Management (NYSE:ARES) has the most amount of capital to invest in its 17-year history, says the head of its tradable credit group.
- "Our estimate of alternative capital in credit exceeds the total drop in dealer inventories [i.e. banks] since 2007," says the Deutsche team.
- ETFs: HYG, JNK, LQD, HYLD, CORP, SJB, CRED, ANGL, HYLS, UJB, XOVR, QLTA, QLTC, IGS, COBO, QLTB, CBND, IGU
Sep. 4, 2014, 1:22 PM
- The FlexShares Disciplined Duration MBS Index Fund (NASDAQ:MBSD) will invest in pass-through securities that have been issued by the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation or the Government National Mortgage Association, as stated in the prospectus.
- Managed by Northern Trust, this is the 16th FlexShares fund currently available to investors
- "Our Disciplined Duration MBS Index Fund is designed to reduce effective duration volatility while providing incremental yield potential and fixed income diversification," said Shundrawn A. Thomas, Head of Northern Trust's Funds and Managed Accounts Group, in a press release.
- Other mortgage-backed security ETFs: CMBS, MBB, GNMA, VMBS, MBG, COBO
Sep. 3, 2014, 1:07 PM
- Investment-grade bonds (NYSEARCA:LQD) should provide annual returns of just 1-2% for the next seven years, says Morgan Stanley Wealth Management's Jon Mackay, meaning an investor will lose money after accounting for inflation. This compares to the 8.7% average annual return posted for the last three decades.
- What to do? Rotate out of the perceived "safe havens," says Mackay, and move into higher-yielding assets. It's hardly contrarian advice as investors have been plowing money into junk debt, equities, and alternatives like real estate and private-equity for years. High-yield bonds globally are on pace for another big year after returning 142.7% in the previous five years.
- ETFs: LQD, CORP, CRED, QLTA, COBO, IGS, CBND, IGU, QLTB
Jul. 25, 2014, 3:42 PM
- "We think the likelihood of a rise in government bond yields has increased and see this as a key aspect of the near-term macro outlook," says analyst Anders Nielsen as Goldman Sach's Global Opportunity Asset Locator (GOAL) downgrades equities to Neutral over the next 90-day period.
- This is a short-term call, says Nielsen, reminding his team's continuing to be Overweight equities over the next 12 months.
- The outlook for corporate credit is a bit more dour, with that asset class being downgraded to Underweight over both the next 3 and 12 months. Most at risk, says Nielsen, are investment grade credits given that spreads there are the tightest.
- Broad equity ETFs: VV, SCHX, FEX, JKD, EQL, IWL, EEH, ERW, FWDD, SYE
- IG Bond ETFs: LQD, CORP, CRED, QLTA, COBO, IGS, CBND, IGU, QLTB
Jul. 25, 2014, 11:14 AM
- Withdrawals from high-yield funds accelerate, hitting about $4.8B this week, according to EPFR Global - that's the 3rd largest weekly outflow since June of 2013.
- Investment-grade funds, on the other hand, saw inflows of roughly $4.2B, their 31st consecutive week of inflows.
- Jim Reid's Deutshce notes high-yield has been struggling this month, but no signs of stress have emerged. Indeed, the high-yield issuance market remains open for business, with another $1.3B priced just yesterday.
- High-yield ETFs: HYG, JNK, HYLD, SJB, IHY, ANGL, HYLS, PGHY, HYXU, UJB, XOVR, QLTC, IJNK
- IG ETFs: LQD, CORP, CRED, PICB, IBND, QLTA, COBO, IGS, CBND, IGU, SUBD, QLTB
Jun. 16, 2014, 3:51 PM
- Concerned about a run on the $10T corporate bond market, the Fed is considering imposing exit fees on bond funds, reports the FT.
- "So much activity in open-end corporate bond and loan funds is a little bit bank like,” Fed Governor Jeremy Stein told the FT just before he stepped down last month. “It may be the essence of shadow banking is ... giving people a liquid claim on illiquid assets.”
- Needless to say, the fees would be unpopular for investors, but fund managers may feel differently, and BlackRock, for one, has called for international rules on exit fees for some funds. Implementing exit fees would be easier said than done as a rule change by the SEC would be necessary, and some commissioners are reportedly set to put up a fight.
- ETFs: LQD, CORP, CFT, QLTA, COBO, IGS, CBND, IGU, QLTB
May 28, 2014, 11:53 AM
- The iShares Interest Rate Hedged Corporate Bond ETF (LQDH) is an active ETF which will invest primarily in the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD) while mitigating the fund's interest rate risk exposure.
- The iShares Interest Rate Hedged High Yield Bond ETF (HYGH) is an active ETF which will invest primarily in the iShares iBoxx $ High Yield Corporate Bond ETF (HYG) while mitigating the fund's interest rate risk exposure.
- Two target maturity date ETFs will also launch on the 29th: the iSharesBond Dec 2016 Corporate Term ETF (IBDF) and the iSharesBond Dec 2018 Corporate Term ETF (IBDH).
- Other high yield corporate bond ETFs: JNK, HYLD, SJB, HYHG, ANGL, HYLS, UJB, XOVR, THHY, QLTC
- Other corporate bond ETFs: CORP, CFT, QLTA, IGHG, COBO, IGS, CBND, IGU, QLTB
- Other target date corporate bond ETFs: BSCE, BSCF, BSCH, BSCG, BSCI, IBCE, IBCB, BSCK, IBCC, IBDC, BSCJ, BSCM, IBCD, IBDA, IBDB, BSCL, IBDD
May 23, 2014, 6:35 PM
- Regional transmission organization PJM says its recent auction to procure power supplies for 2017-18 resulted in a clearing price for resources - which includes generation, annual demand response and energy efficiency - which rose to $120/MW-day for most of its deliverability area.
- PJM, which coordinates the movement of wholesale electricity in all or parts of 13 states and D.C., says the auction continued an overall trend toward more gas-fired generation and increasing diversity of resources.
- PPL, Exelon (EXC), American Electric Power (AEP), Duke Energy (DUK), Dominion Resources (D) and FirstEnergy (FE) are all up ~1% AH.
- Earlier, Barclays downgraded the entire electric sector of the U.S. high-grade corporate bond market to underweight, saying it sees long-term challenges to electric utilities from solar energy which aren't yet priced in.
- ETFs: XLU, LQD, IDU, VPU, CORP, CFT, UPW, FUTY, RYU, FXU, QLTA, SDP, IGHG, COBO, IGS, CBND, IGU, QLTB
Jan. 16, 2014, 3:32 AM
- The number of foreclosure filings dropped to the lowest level since 2007 last year, declining 26% to 1.36M properties, RealtyTrac says. The figure is less than half of the peak of 2.9M properties in 2010.
- States with the highest foreclosure rates in 2013 were Florida, Nevada, Illinois, Maryland and Ohio.
- The number of foreclosure processes started plunged 33% to 747,728, the lowest since RealtyTrac began tracking the data in 2006. Bank repossessions plummeted 31% to 462,970 properties, the least since 2007. (PR)
- Relevant tickers: PHM, MHO, TOL, KBH, RYL, HOV, SPF, FNMA, FMCC
- ETFs: ITB, XHB, MBB, MBG, VMBS, CMBS, COBO
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