CAM Investment Grade Weekly Insights

Fund Flows & Issuance: According to Lipper, for the week ended February 15th, investment grade funds posted a net inflow of $3.054bn. The total year-to-date net inflow into investment grade funds ended the week at $20.342bn. Per Bloomberg, investment grade corporate issuance through Thursday was $25.05bn. Year-to-date investment grade issuance has now topped $218bn, up over 60% from this point last year.

(Bloomberg) 600 MHz Spectrum Auction Highlights Telco Demand Shift

• The 600 MHz auction’s assignment phase will end no later than March 30, 24 days after it begins, as the spectrum sale nears a close. Carriers including AT&T, T-Mobile and Verizon and others such as Dish and Comcast bid $19.6 billion for the licenses in the forward portion of the auction and now will compete for their exact frequency allocations in the assignment phase of the auction.
• Once bidding ends, the FCC will announce the winners and down payments will then be due within 10 days.
• Broadcasters including 21st Century Fox, Gray TV, Tribune and Sinclair won’t receive proceeds at least until payments are made by forward auction bidders. Broadcasters will be paid out when license applications from winning forward auction bidders are approved on a rolling, per-license basis.

(Press Release, Conference Call) Masco reported 4Q and full year results

• Masco has around $600mm in cash over in Europe and other jurisdictions
• The company is seeing strong demand in their Repair & Remodeling products across all product lines and price points. R&R accounts for 83% of total sales (unchanged)
• 2016 Revenue influenced by:
  
  • Decreased by $68mm (1% of revenue) due to currency translation.
    
    • Currency translation is expected to affect sales by $100mm during 2017
  • Decreased by $21mm (.3% of revenue) due to warranty reserve increase in their Milgard window business in Q3
• Masco is still focusing on bolt-on strategies in either their plumbing or decorative architecture segments, which has been unchanged over the past several quarters
  
  • One change, in their comment, was that they are also looking at other areas, but the focus is still on plumbing and decorative architecture
• Masco returned $585mm to its shareholders through dividends and share repurchases during 2016 (compared to $546mm in FCF)

(Bloomberg) Ford’s Dozing Engineers Side With Google in Full Autonomy Push

• As Ford Motor Co. has been developing self-driving cars, the U.S. automaker has started noticing a problem during test drives: Engineers monitoring the robot rides are dozing off.
• Company researchers have tried to roust the engineers with bells, buzzers, warning lights, vibrating seats and shaking steering wheels.
• BMW, Mercedes-Benz and Volkswagen AG’s Audi plan to roll out semi-autonomous cars starting next year that require drivers to take over with as little as 10 seconds notice.
• Ford plans to skip that level altogether. The automaker has aligned with Alphabet Inc.’s Waymo, which made similar discoveries related to human inattention while researching Google’s driverless car.