Walt Disney paper well sought after

Bond dealers were thrown through a loop Tuesday with early morning indications showing investors were set to return refreshed from a long holiday weekend with buying boots on. A rise in appetite for riskier equities dulled demand in early going for government bonds. However, after an early rise in yields and a lack of follow-through buying, Treasuries rallied sending yields down on the day and maintaining interest in the corporate space where demand remains strong for Anadarko paper in the non-investment grade universe and for Walt Disney in the investment arena.

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Investment Grade -

The Walt Disney Co. (DIS) – Investors appeared to be heavy-buyers of Disney’s recently-issued 3.75% coupon 10-year paper with over $25mm changing hands Tuesday. Disney paper was the single-most active issue in thin post-holiday trading as investors pushed its price ahead by eight-cents per $1,000 face value to 100.68 sending the yield lower to 3.66%. Shares in Disney continue to rebound from an excursion lower to frequently-tested support at $40.50 giving them around 10% upside back to the top of a well-established trading range over the past three months.

ArcelorMittal (MTNA) – There was also strong demand for paper issued by Luxembourg-based metal-producer, ArcelorMittal. Some $24mm of its 3.75% March 2016 maturity changed hands Tuesday as investors sought its 3.35% yield-to-maturity. Bonds issued by the company are rated Baa3 by Moody’s. The company received the go-ahead from EC regulators for its planned purchase of German coke producer Kokerei Prosper following its findings that the proposal would not lead to a monopoly. ArcelorMittal also recently announced a $2.2 billion mining investment in Canada.

High Yield -

Anadarko Petroleum Corp. (APC) – The top-two traded corporate bonds on Tuesday belonged to oil explorer, Anadarko where we continue to see demand show up for its Ba1-rated issues. Most actively traded was its September 2017 issue where prices slipped by a nickel. The March 2014 issue, however, advanced by 71 cents per $1,000 face value to trade at 115.18 lowering its yield to 1.99%. Between the two issues investors bought $37mm worth of bonds.

Life Technologies Corp. (LIFE) – Life Technologies March 2020 maturity appears offered Tuesday with investors marking the paper down by around 34 cents per $1,000. The company develops biotechnology tools used by researchers although it appears that its performance is being put under the microscope today. Around $10mm of the particular maturity have traded so far according to our scanners with its yield rising to 4.69%. During the past 12 months this issue has outflanked the return on comparable treasuries by around 1.2%.

Andrew Wilkinson is a Senior Market Analyst at Interactive Brokers LLC

Note: The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Interactive Brokers LLC nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither IB nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance is not necessarily indicative of future results.

About the Author
Andrew Wilkinson

Andrew is a seasoned trader and commentator of global financial markets. He worked for several London-based banks trading cash and derivatives before moving to the U.S. to attend graduate school. Andrew re-joins Interactive Brokers following a two-year stretch at a major Wall Street broker-dealer as their Chief Economic Strategist. His coverage of stocks, options, futures, forex and bonds regularly surfaces in global media, and over the last several years Andrew has made many TV appearances on Bloomberg, BBC, CNBC and BNN and Yahoo Finance.

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