Welcome to our Corporate Bond Market Volatility analysis for July ‘24 - US edition.
Every quarter, we dive into our datasets to identify volatility in bond markets via the Cognitive Credit app.
Why does Bond Volatility matter? Because volatility is an indicator of opportunity. As our regular readers will already know, once a bond has made a significant price move in a short period of time, it is 20x more likely to move a similar magnitude again, as compared to the rest of the investable universe.
Without further delay, here is our US focussed Volatility analysis for July 2024.
As with our previous editions, we continue to identify opportunities by a 7 point move hurdle: If a bond moves through a 7 point range over the previous 5 closes, we classify that as a volatility event.
All data used for this analysis is available via the Cognitive Credit web application in partnership with S&P Global.
Here’s the list of companies that met the criteria this month, with notable move sizes:
Both CenturyLink and Curo Group are USD bond issuers that have appeared in this publication before - reinforcing the point that missing the first move doesn’t mean you’ve missed the opportunity. The big moves will - potentially - come again soon!
As always, not every one of these opportunities will interest every type of investor - the opportunity set is quite diverse.
However, we’ve picked out a few of the names and added some additional insight from the analytics available in our web application below.
Indicative of broadening opportunities, there were 7 new USD denominated bonds added to our list this quarter compared to our last publication.
With the 2nd largest bond price move we recorded in our latest filter, a new addition is iHeartMedia Inc. In the recent quarter, iHeartMedia Inc. creditors have retained financial and legal advisers as they eye a drop in broadcasting revenue at a time when other media companies are pushing ahead with debt restructurings (Source: WPP 2023 Preliminary Results Presentation).
In the short term, the company reports the contribution of the ongoing 2024 political cycle on iHeartMedia Inc’s revenue segments. Cognitive Credit users can see a breakdown of this in the iHeartMedia’s First Quarter 2024 Investor Presentation.
Another new addition this month is Dupont, after the company decided to split into three publicly traded entities and elect a new CEO. The Company triggered an event in the first week of June, topping a 20 point rally since the October lows.
Now the first event has been triggered, Cognitive Credit clients can keep track of this company by adding it to their Watchlist here.
Turning to an M&A story next, ratings agencies placed Marathon Oil bonds under review for upgrade following ConocoPhillips' acquisition announcement
CenturyLink’s Embarq bonds have traded at fresh lows in recent weeks. CenturyLink noted back in 2021 that their reliance on the legacy infrastructure acquired from Embarq was diminishing (Source: Lumen Technologies Quarterly Report).
And finally, Altice is a name that appears in both our USD and EUR bond analysis too.
While the company has successfully addressed its near term debt maturity profile (Source: Altice USA Q1 2024 Results), all of its bonds are still trading at distressed levels.
Altice is also the most viewed name on the Cognitive Credit App this year. To access the full financials and up-to-date credit model within our application, go here.
Why look at price moves that have already happened? Because, with volatility comes opportunity. A bond that triggers an event is 20x more likely to appear on our Volatility list again than a bond in our coverage universe that hasn’t.
With Cognitive Credit, you can conveniently track market volatility and stay current on as many names as you need. With ready-to-use, fully customizable financials, you can form your own view quickly and easily maintain it with instant earnings updates.
And with built-in analytics, you can interrogate every metric, financial statement and instrument to enhance your understanding of an issuer.
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