According to Lipper, flows into investment-grade bond funds were negative for the week ended December 16. The investment-grade bond funds saw record net outflows of $5.1 billion during the week. This was compared to outflows amounting to $1.6 billion in the week ended December 9.
Investment-grade bond funds have seen year-to-date (or YTD) net inflows of $6.7 billion up to December 16, 2015.
In the week to December 18, no investment-grade corporate bonds were issued. Investment-grade bond issuance fell last week to zero as compared to $32.2 billion in the previous week.
However, in the previous week, Visa (V), Schlumberger Holding (SLB), Credit Suisse Group Funding (Guernsey), a subsidiary of Credit Suisse AG (CS), Toronto-Dominion Bank (TD), and Marathon Petroleum (MPC) were among the biggest issuers of investment-grade bonds.
Yield and spread analysis of corporate high quality debt securities
Investment-grade bond yields usually follow cues from the Treasuries market. Last week, Treasury yields rose along the medium and long end of the yield curve. Investment-grade corporate bond yields also rose because of the Fed’s interest rate hike.
Yields rose by ten basis points from the previous week and ended at 3.6% on December 18, according to the BofA Merrill Lynch US Corporate Master Effective Yield.
Due to the rise in yields, the weekly returns on the MFS Total Return Bond Fund – Class A (MRBFX) and the Ivy Limited-Term Bond Fund – Class A (WLTAX) fell by 0.4% each.
Like yields, the option-adjusted spread (or OAS) rose by three basis points to end at 1.7% on December 18. The OAS measures the average difference in yields between investment-grade bonds and Treasuries. Thus, a rise in this spread implied that the risk of high grade bonds relative to Treasuries increased.
The PE (price-to-earnings) ratios of Cintas (CTAS), Aramark (ARMK), Gentex (GNTX), UniFirst (UNF) are 25.9x, 33.5x, 15.6x, and 16.7x, respectively.
Freeport-McMoRan (FCX) is scheduled to release its first-quarter earnings on April 25.
Ford has risen 8.2% in April so far as compared to 2.6% gains in the S&P 500 Index.
On April 22, natural gas prices settled at $2.52 per MMBtu—1.4% above the lowest closing level for active natural gas futures since June 8, 2016.
Kimberly-Clark (KMB) stock rose 5.4% on April 22 after the company released stronger-than-expected first-quarter results.
Alaska Air Group (ALK) plans to report its first-quarter earnings results on April 25.
Recently, Bank of America Merrill Lynch initiated coverage on Cronos Group (CRON) with an "underperform" rating.