By contrast, this
Kinder Morgan Inc.
bond was tighter by
about 70 basis points.
This Buckeye Partners
LP bond traded more
than 90 basis points
wider over the
preceding six months.
Select BCLASS Level 4
to further segment
the energy group and
other sectors. Energy groups such
as midstream trade at
a wider spread than
other segments.
Fig. 3 Expanding the Midstream Group lets you see how individual bonds
have traded over the past six months.
Fig. 2 Here we’ve further broken down the energy, communications, and tech sectors.
and over the past 6 months. Hit Close. The four energy sectors were
tighter on average as of late July. Midstream was 29 basis points
tighter. To display the individual bonds in the Midstream Group, hover
over the blue plus sign, right-click, and select Expand Group. Use the
zoom tool to focus on bonds of up to, say, 30 years (FIG. 3).
Given the trade war and soft energy markets, midstream energy
companies may merit further analysis. The U.S.’s growing exports of
liquefied natural gas may be positive for midstream energy companies,
especially the ones servicing LNG facilities: If you own the LNG pipe-
lines leading into the transportation hubs while exports are booming,
you should be OK. Midstream investment-grade credits are typically
rated BBB. They trade wider than the rest of the investment-grade
energy sector but are firmly entrenched in the lower rungs of the IG
ratings spectrum. By contrast, high-yield midstream companies
generally trade at tighter spreads compared with other HY energy
credits, thanks to lower earnings and credit volatility.
- Looking back over the past several months allows you to
gauge the journey these issuers have been on. Supplement your
FIW workflow by analyzing the change in spreads or other metrics.
To do that, click on the Y-axis drop-down again and select More .... In
the Customize Spread window that appears, select G-Spread, Change,
- To use FIW’s robust filters to analyze these bonds based on
their sectors, select the Group By drop-down and choose BCLASS
Level 4 Classification Name. Now the broader energy, communi-
cations, and technology groups will be broken down further. Right-
click on the background of the chart and select Collapse All Groups.
Using the Axes drop-downs, select G-Spread as the Y axis and Years
to Maturity as the X. (G-spread is the spread to the matched point
on the government curve.)
Note that the Midstream Group, Independent Group, Oil Field
Services Group, and Refining Group were at the wider range of the
G-spread scale as of late July, compared with the other sectors (FIG. 2).
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