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North American Bond Research – April 1, 2020

Posted on April 1, 2020
HIGH YIELD BOND RESEARCH
April 1, 2020
Bond Markets

MARKETS TAKE A BEATING AS TRUMP AND OTHER LEADERS WARN THAT FOR THE NEXT 2 WEEKS, AND CHANCES ARE MUCH LONGER, THE VIRUS CASE COUNT AND DEATHS ARE GOING TO SOAR! 10 Year Treasury notes were down 6.3 basis points. S&P -4.41%, Dow -4.44%, NASDAQ -4.41%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 930000+ CASES AND 47000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 210000+ CASES AND 4700+ DEATHS.  Among high-grade bonds showing topmost price gains at appreciable volumes traded, Ford Motor Co (USD) 7.4% 11/1/2046 made analysts’ ‘Conviction Buy’ list. (See the chart below for Ford Motor Co bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Sprint Capital Corp. 6.875% 11/15/2028 +0.2%
  Sprint Capital Corp. 8.75% 3/15/2032 +0.9%
  Whiting Petroleum Corp. 6.25% 4/1/2023 144A +1.8%
  Gap Inc. 5.95% 4/12/2021 +0.4%
  Teva Pharmaceutical Industries LTD 2.8% 7/21/2023 +1.4%
–   Whiting Petroleum Corp. 5.75% 3/15/2021 -52.9%
  Expedia Inc. 5% 2/15/2026 -1.8%
  Targa Resources Partners LP 5.875% 4/15/2026 -1.4%
  Expedia Inc. 4.5% 8/15/2024 -2.0%
  Expedia Inc. 3.8% 2/15/2028 (1) -3.7%
Whiting Petroleum Corp.   5.75% 3/15/2021
Sprint Capital Corp.   6.875% 11/15/2028
Sprint Capital Corp.   8.75% 3/15/2032
Whiting Petroleum Corp.   6.25% 4/1/2023 144A
Expedia Inc.   5% 2/15/2026
Targa Resources Partners LP   5.875% 4/15/2026
Expedia Inc.   4.5% 8/15/2024
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.96% 8.35% -12.16% -12.06% -12.06% -1.35%
Mining 0.35% 2.71% -36.36% -40.68% -40.68% -32.71%
Construction 0.74% 2.47% -11.15% -9.56% -9.56% 0.62%
Manufacturing 0.73% 6.08% -10.47% -9.93% -9.93% -1.26%
Transportion, Communication, Electric/Gas 0.64% 6.94% -11.05% -10.17% -10.17% -0.74%
Wholesale 0.57% 3.23% -13.18% -13.43% -13.43% -4.64%
Retail 0.60% 5.87% -14.42% -14.40% -14.40% -2.29%
Finance, Insurance, Real-Estate 0.96% 6.53% -10.40% -9.73% -9.73% 0.29%
Services 0.62% 7.46% -10.86% -10.73% -10.73% -1.04%
Public Administration 4.89% 7.21% -12.50% -11.19% -11.19% -2.71%
Energy 0.53% 2.59% -36.72% -40.47% -40.47% -33.52%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
 

 

(None Current 04/01/2020)
1. AVI-SPL: $370MM covenant lite TLB (B2/B)

2. Service Logic: $140MM bank debt: $40MM TL; $100MM DD TL

3. CJ Foods Inc.: $285MM TLB

4. Cornerstone Ondemand Inc.: $1.135MM senior secured credit facilities: $150MM revolver; $985MM TLB

5. Eldorado Resorts Inc./Caesars Entertainment Corp.: $6.4B credit facilities:$1B revolver at Eldorados; $3B seven-year cove-lite TLB due 2027 at Eldorado; $2.4B seven-year cove-lite TLB due 2027 at Caesars Resorts Collection

6. Innovate Xcessories & Services LLC: $695MM credit facilities: $75MM revolver; $620MM TL(B2/B)

7. Instructure: $825MM senior secured credit facilities: $50MM revolver; $775MM TL

8. RSA: $1.425B credit facilities: $75MM revolver; $1B TL; $350MM TL

9. Snapav: $390MM term loans: $290MM TL (B2); $100MM TL

10. Tata Chemicals North America Inc. : $380MM TL (Ba3)

Additional Commentary

NEW ISSUANCE WATCH: No new issues  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 Loans Top Narrowing Loans
Ascent Resources Marcellus LLC (USD) TL EXT L+650 12/31/2049
J Crew Group Inc. (USD) TLB L+322 03/06/2021
New Arclin US Holding Corp (USD) TL L+875 02/14/2025
Arvos Holding (EUR) TLB2 E+450 08/29/2021
A-L Parent LLC (USD) TL L+325 11/18/2023
Concordia International (EUR) TL E+525 09/06/2024
Continental Foods Belgium NV (EUR) TLB E+375 12/31/2023
Booz Allen Hamilton Inc. (USD) TL L+175 11/22/2026
AI Convoy Luxembourg Sarl (USD) TL L+350 01/20/2027
Summer (BC) Holdco B SA R.L. (EUR) TL E+500 12/4/2026

Loans and Credit Market Overview

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  136 bp (basis points), as of 04/1/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
April 1, 2020
Bond Markets

MARKETS TAKE A BEATING AS TRUMP AND OTHER LEADERS WARN THAT FOR THE NEXT 2 WEEKS, AND CHANCES ARE MUCH LONGER, THE VIRUS CASE COUNT AND DEATHS ARE GOING TO SOAR! 10 Year Treasury notes were up 2.8 basis points. S&P -1.69%, Dow -1.84%, NASDAQ -0.95%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 855000+ CASES AND 42000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 185000+ CASES AND 3800+ DEATHS.   Among high-grade bonds showing topmost price gains at appreciable volumes traded, Baker Hughes Inc. (USD) 4.08% 12/15/2047 made analysts’ ‘Conviction Buy’ list. (See the chart below for Baker Hughes Inc. bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Nvidia Corp. 2.85% 4/1/2030 +0.3%
  Exelon Corp. 4.7% 4/15/2050 +0.3%
  TJX Cos. Inc. 4.5% 4/15/2050 +1.3%
  United Parcel Service Inc. 3.9% 4/1/2025 +0.1%
  TJX Cos. Inc. 3.875% 4/15/2030 +0.0%
–   Oracle Corp. 2.5% 4/1/2025 -0.2%
  AT&T Inc. 4.5% 3/9/2048 -4.1%
  Nvidia Corp. 3.5% 4/1/2050 -0.3%
  SYSCO Corp. 6.6% 4/1/2050 -1.1%
  SYSCO Corp. 5.95% 4/1/2030 -0.5%
Oracle Corp.   2.5% 4/1/2025
AT&T Inc.   4.5% 3/9/2048
Nvidia Corp.   3.5% 4/1/2050
SYSCO Corp.   6.6% 4/1/2050
SYSCO Corp.   5.95% 4/1/2030
Goldman Sachs Group Inc.   3.5% 4/1/2025
Nvidia Corp.   2.85% 4/1/2030
Wells Fargo & Co.   5.013% 4/4/2051
Exelon Corp.   4.7% 4/15/2050
JP Morgan Chase & Co.   4.493% 3/24/2031
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.08% 1.22% -7.37% -3.96% -3.96% 4.01%
Mining 0.23% 3.18% -16.81% -15.02% -15.02% -3.99%
Construction 0.14% 2.10% -10.17% -7.39% -7.39% -0.02%
Manufacturing 0.38% 4.65% -4.88% -1.56% -1.56% 6.88%
Transportion, Communication, Electric/Gas 0.29% 5.72% -7.36% -3.32% -3.32% 6.51%
Wholesale 0.30% 3.13% -6.58% -4.19% -4.19% 4.28%
Retail 0.43% 5.10% -5.56% -2.13% -2.13% 6.72%
Finance, Insurance, Real-Estate 0.49% 3.76% -4.38% -1.60% -1.60% 5.38%
Services 0.19% 4.78% -4.92% -1.40% -1.40% 7.24%
Public Administration 0.08% 0.12% 1.17% 3.31% 3.31% 5.86%
Energy 0.25% 4.06% -16.28% -14.47% -14.47% -4.80%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. San Diego Gas & Electric Co. (USD) 3.32% 4/15/2050 (03/31/2020): 400MM Secured Notes, Price at Issuance 99.867, Yielding 3.33%.

2. FOX Corp. (USD) 3.05% 4/7/2025 (03/31/2020): 600MM Senior Unsecured Notes, Price at Issuance 99.844, Yielding 3.08%.

3. FOX Corp. (USD) 3.5% 4/8/2030 (03/31/2020): 600MM Senior Unsecured Notes, Price at Issuance 99.799, Yielding 3.52%.

4. General Mills Inc. (USD) 2.875% 4/15/2030 (03/31/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.8, Yielding 2.9%.

5. Ameriprise Financial Inc. (USD) 3% 4/2/2025 (03/31/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.577, Yielding 3.09%.

6. Athene Holding LTD (USD) 6.125% 4/3/2030 (03/31/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.808, Yielding 6.15%.

7. Visa Inc. (USD) 1.9% 4/15/2027 (03/31/2020): 1500MM Senior Unsecured Notes, Price at Issuance 99.718, Yielding 1.94%.

8. Visa Inc. (USD) 2.05% 4/15/2030 (03/31/2020): 1500MM Senior Unsecured Notes, Price at Issuance 99.855, Yielding 2.07%.

9. Visa Inc. (USD) 2.7% 4/15/2040 (03/31/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.264, Yielding 2.75%.

10. Ameren Corp. (USD) 3.5% 1/15/2031 (03/31/2020): 800MM Senior Unsecured Notes, Price at Issuance 99.763, Yielding 3.53%.

 

 

(None Current 04/01/2020)
Additional Commentary

NEW ISSUANCE WATCH: on 03/31/2020 participants welcome a $750MM new corporate-bond offering by TJX CoThe 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 Loans Top Narrowing Loans
Ascent Resources Marcellus LLC (USD) TL EXT L+650 12/31/2049
J Crew Group Inc. (USD) TLB L+322 03/06/2021
New Arclin US Holding Corp (USD) TL L+875 02/14/2025
Arvos Holding (EUR) TLB2 E+450 08/29/2021
A-L Parent LLC (USD) TL L+325 11/18/2023
Concordia International (EUR) TL E+525 09/06/2024
Continental Foods Belgium NV (EUR) TLB E+375 12/31/2023
Booz Allen Hamilton Inc. (USD) TL L+175 11/22/2026
AI Convoy Luxembourg Sarl (USD) TL L+350 01/20/2027
Summer (BC) Holdco B SA R.L. (EUR) TL E+500 12/4/2026

Loans and Credit Market Overview

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 136 bp (basis points), as of 04/1/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

Copyright 2020 Advantage Data Inc. All Rights Reserved. http://www.advantagedata.com

Information in this document should not be regarded as an offer to sell or solicitation of an offer to buy bonds or any financial instruments referred to herein. All information provided in this document is believed to be accurate. However, Advantage Data and its sources make no warranties, either express or implied, as to any matter whatsoever, including but not limited to warranties of merchantability or fitness for a particular purpose. Opinions in this document are subject to change without notice. Electronic redistribution, photocopying and any other electronic or mechanical reproduction is strictly prohibited without prior written permission from Advantage Data Inc.

 


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