27 March 2015 US Fixed Income Weekly The top portion on the graph reflects industry sectors, and bottom portion shows a breakout by leverage category. Left side displays current average spread-per-turn (SPT) in basis points, while the right-hand side shows percentile ranking score of current SPT vs history since Dec 2009. On a sector level, the interesting conclusions are: everything is trading to a certain degree of tightness, with an average percentile ranking score of 20%, which perhaps is not an eye opener for most experienced market participants. Specifically on sectors, autos and telecoms look relatively interesting here, while tech and gaming are the most overvalued based on this metric. We note that autos also came out as the most undervalued sector on our equity- reaction-to-oil screen in January. Auto equities have outperformed S&P 500 by 5.5% since that publication date, and we continue to believe, reinforced by today's findings, that there is more to go in capturing autos outperformance in both equities and credit. The sector that came out most overvalued in equities in January - utilities - has proceeded to underperform S&P 500 by 12.5% since then. It did not make it to our HY SPT screen due to a low issuer count, but the original equity signal pointed towards a 30% overvaluation, so perhaps more to go there too. We excluded energy from the above SPT sector analysis for the obvious reason that the sector is too distressed at this point to be meaningfully judged against the rest of the market through the lenses of a single valuation framework. Here, we think a better approach would be to look at debt-to-enterprise-values as a factor for bond dollar prices. As a reminder, we have previously shown this indicator to have strong predictive power over future defaults (names trading over 65% D/EV have experienced a 1:3 subsequent default probability). Here, in Figure 4 we are showing US energy single-Bs and CCCs bond prices (average