North American Bond Research – February 13, 2020

MARKETS AGAIN JUMP TO RECORD HIGHS AS CHINA’S SENIOR MEDICAL ADVISORS SUGGESTS CORONAVIRUS WILL BE DONE BY APRIL!    S&P 10 year Treasury notes were down 4.0 basis points.  S&P +0.65%, Dow +0.94%, NASDAQ +0.91%.

Key Gainers and Losers	Volume Leaders
+   Communications Sales & Leasing Inc. 8.25% 10/15/2023 + 0.1%   Charter Communications Operating LLC 4.8% 3/1/2050 + 0.4%   BAC Cap Trust X 5.63% 3/15/2043 + 2.5% –   Deutsche Bank AG 6% PERP -0.1%   HCA Inc. 3.5% 9/1/2030 -0.1%   Sprint Capital Corp. 6.875% 11/15/2028 -0.4%	Deutsche Bank AG   6% PERP Communications Sales & Leasing Inc.   8.25% 10/15/2023 HCA Inc.   3.5% 9/1/2030

Industry Returns Tracker

Industry Past Day Past Week Past Month Past Quarter YTD Past Year Agriculture, Forestry, Fishing -0.06% 0.52% 0.69% 2.98% 1.48% 17.65% Mining 0.07% -0.16% -2.97% 1.76% -2.48% 2.24% Construction 0.02% 0.48% 1.75% 3.26% 1.81% 13.23% Manufacturing 0.00% 0.41% 0.79% 3.25% 1.29% 11.46% Transportion, Communication, Electric/Gas 0.02% 0.94% 1.25% 3.66% 1.77% 12.38% Wholesale 0.01% 0.18% 0.62% 3.36% 1.32% 10.40% Retail -0.01% 0.61% 0.85% 3.49% 1.37% 12.64% Finance, Insurance, Real-Estate -0.01% 0.40% 0.95% 3.15% 1.51% 11.80% Services 0.00% 0.46% 0.82% 3.08% 1.25% 10.77% Public Administration -0.08% 0.61% 1.12% 3.68% 1.74% 14.90% Energy 0.04% -0.01% -2.25% 2.51% -1.59% 4.03%   Total returns (non-annualized) by rating, market weighted.

New Issues

Forward Calendar

1. RED Oak Capital Fund IV, LLC (USD) 9% 6/30/2026 (02/12/2020): 50MM Secured Notes, Price at Issuance 100, Yielding 9%. 2. HCA Inc. (USD) 3.5% 9/1/2030 (02/12/2020): 2700MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.5%. 3. Hopson Capital Intl. Group Co. LTD (USD) 6% 2/17/2021 (02/12/2020): 500MM Senior Unsecured Notes. 4. Deutsche Bank AG (USD) 6% PERP (02/12/2020): 1250MM Junior Subordinated Notes, Price at Issuance 100.028. 5. Hecla Mining Co. (USD) 7.25% 2/12/2028 (02/13/2020): 475MM Senior Unsecured Notes, Price at Issuance 100, Yielding 7.25%.

1. Qmax Financial Holdings Inc.: $225MM, Expected 4th Quarter 2019 2. Calpine Corp.: $1.4B bonds, Expected Q4 2019 3. Diamondback Energy Inc.: High-yield notes, Expected Q4 2019 4. DDM Holding AG: ¬100MM, Expected Q4 2019 5. Presidio Inc.: $1.775B high yield bonds, Expected 4th Quarter 2019 6. Alpha Auto Group: $225MM notes, Expected 4th Quarter 2019

NEW ISSUANCE WATCH: on 02/03/2020 participants welcome a $300MM new corporate-bond offering by
Castle US Holdings.  The most recent data showed money flowed in of ETF/mutual funds for the week ended 01/10/2020, with a net inflow of $9.8 billion.

Top Widening Credit Default Swaps (CDS)	Top Narrowing Credit Default Swaps (CDS)
Rite Aid Corp. (5Y Sen USD MR14) Weatherford International LTD (5Y Sen USD MR14) Hertz Corp. (5Y Sen USD CR14)	Ghana, Republic of (5Y Sen USD CR14) Road King Infrastructure LTD (5Y Sen USD CR14) Export Credit Bank of Turkey (5Y Sen USD CR14)

SYNDICATED LOANS HIGHLIGHTS:

Deals recently freed for secondary trading, notable secondary activity:

• Symantec Corp., Broadcom LTD, Toll Brothers Inc., Cole-Parmer Instrument Co.

OVERALL CREDIT MARKET:

Long-term bond yields are expected to hit a cyclical peak in 2019 given tight fiscal policy and lagging global economies. Europe remains checked by stubbornly low inflationary forces.  Positive effects remained in force:

• TED spread held below 13 bp (basis points), as of 02/13/2020
• Net negative capital flows into high-yield ETFs & mutual funds

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