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North American Bond Research – April 14, 2020

Posted on April 14, 2020
HIGH YIELD BOND RESEARCH
April 14, 2020
Bond Markets

MARKETS WERE UP AS PLANS TO REOPEN THE ECONOMY ARE FLOATED BY BOTH THE FEDERAL AND STATE GOVERNMENT. A CONSORTIUM OF STATES ON BOTH THE WEST COAST AND THE EAST COAST HAVE BEEN FORMED TO COORDINATE OPENING THEIR ECONOMIES.  10 Year Treasury notes were up .3 basis points. S&P +3.06%, Dow +2.39%, NASDAQ +3.95%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 2 MILLION+ CASES AND 125000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 610000+ CASES AND 26000+ 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
+   Alcoa Inc. 5.125% 10/1/2024 +0.3%
  Ford Motor Credit Co. 4.389% 1/8/2026 +0.3%
  Sprint Capital Corp. 6.875% 11/15/2028 +4.5%
  Radian Group Inc. 4.5% 10/1/2024 +5.2%
  Petrobras Global Finance BV 6.85% 6/5/2115 +1.6%
–   General Motors Co. 6.25% 10/2/2043 -2.3%
  Ford Motor Credit Co. 5.113% 5/3/2029 -1.7%
  SpringLeaf Finance Corp. 7.125% 3/15/2026 -1.0%
  SpringLeaf Finance Corp. 6.125% 5/15/2022 -1.1%
  Ford Motor Co. 4.346% 12/8/2026 -3.1%
General Motors Co.   6.25% 10/2/2043
Ford Motor Credit Co.   5.113% 5/3/2029
SpringLeaf Finance Corp.   7.125% 3/15/2026
Alcoa Inc.   5.125% 10/1/2024
SpringLeaf Finance Corp.   6.125% 5/15/2022
Ford Motor Co.   4.346% 12/8/2026
Charter Communications Operating LLC   4.8% 3/1/2050
Ford Motor Credit Co.   4.389% 1/8/2026
SpringLeaf Finance Corp.   5.375% 11/15/2029
Petrobras Global Finance BV   6.85% 6/5/2115
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 1.11% 2.74% -8.10% -9.70% -9.03% 1.68%
Mining 2.76% 4.04% -23.23% -34.30% -33.59% -26.41%
Construction 1.61% 1.11% -9.77% -9.06% -8.56% 1.43%
Manufacturing 1.62% 2.08% -8.06% -8.41% -7.82% 0.14%
Transportion, Communication, Electric/Gas 1.83% 3.24% -6.84% -6.59% -6.30% 2.76%
Wholesale 0.73% 0.89% -10.37% -12.00% -11.48% -3.19%
Retail 2.36% 2.78% -12.78% -13.81% -13.48% -2.67%
Finance, Insurance, Real-Estate 1.41% 1.45% -9.79% -9.95% -9.59% -0.56%
Services 2.09% 2.25% -8.72% -9.51% -9.17% -0.33%
Public Administration 0.48% 0.93% -13.72% -12.91% -12.35% -4.33%
Energy 3.14% 4.52% -23.03% -32.99% -32.23% -26.06%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 04/13/2020)
1. Alpha Auto Group: $225MM notes

2. Martin Midstream Partners LP: $400MM senior secured notes

3. INTL Fcstone: $350MM senior secured notes

4. AVI-SPL: $370MM covenant lite TLB (B2/B)

5. Open Lending LLC: $225MM TLB

6. Xperi Corp. : $1.1B seven-year secured covenant lite TLB

7. Whole Earth Brands (ACT II GLOBAL ACQUISTION CORP.):: $235 MM credit facilities: $50MM reolver; $185MM term A

8. T-Mobile USA Inc.: $8B senior secured credit facilities: $4B five-year revolver; $4B seven-year cove-lite TL

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

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

Additional Commentary

NEW ISSUANCE WATCH: No New Issues.
Top Widening Loans Top Narrowing Loans
Donnelley Financial Solutions Inc (USD) TLB L+300 09/29/2023
Wittur (EUR) TLB E+450 09/23/2026
Arvos Holding (EUR) TLB2 E+450 08/29/2021
Epic Y-Grade (USD) TLB L+600 06/13/2024
Bartec Holding GmbH (EUR) TLC5 06/30/2022
Prosol Gestion (EUR) TLB E+400 04/21/2024
Sebia SA (EUR) TLB E+300 10/24/2024
Duff & Phelps LLC (USD) TL L+375 03/06/2027
Help/Systems LLC (USD) TL 10/30/2027
BCA Marketplace PLC (EUR) TLB2 E+325 09/24/2026

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  100 bp (basis points), as of 04/14/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
April 14, 2020
Bond Markets

MARKETS WERE UP AS PLANS TO REOPEN THE ECONOMY ARE FLOATED BY BOTH THE FEDERAL AND STATE GOVERNMENT. A CONSORTIUM OF STATES ON BOTH THE WEST COAST AND THE EAST COAST HAVE BEEN FORMED TO COORDINATE OPENING THEIR ECONOMIES.  10 Year Treasury notes were up .3 basis points. S&P +3.06%, Dow +2.39%, NASDAQ +3.95%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 2 MILLION+ CASES AND 125000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 610000+ CASES AND 26000+ 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
+   CVS Health Corp. 5.05% 3/25/2048 +4.2%
  Keurig Dr Pepper Inc. 3.2% 5/1/2030 +1.4%
  Ryder System Inc. 4.625% 6/1/2025 +4.4%
  Citigroup Inc. 3.106% 4/8/2026 +0.6%
  Anheuser-Busch Inbev Worldwide Inc. 4.35% 6/1/2040 +1.0%
–   GE Capital Intl. Funding Co. 4.418% 11/15/2035 -1.3%
  Keurig Dr Pepper Inc. 3.8% 5/1/2050 -2.3%
  Comcast Corp. 3.4% 4/1/2030 -0.6%
  Chevron Corp. 2.1% 5/16/2021 -0.4%
  Keurig Dr Pepper Inc. 3.551% 5/25/2021 -0.0%
GE Capital Intl. Funding Co.   4.418% 11/15/2035
Keurig Dr Pepper Inc.   3.8% 5/1/2050
Comcast Corp.   3.4% 4/1/2030
CVS Health Corp.   5.05% 3/25/2048
Chevron Corp.   2.1% 5/16/2021
Keurig Dr Pepper Inc.   3.551% 5/25/2021
Keurig Dr Pepper Inc.   3.2% 5/1/2030
Ryder System Inc.   4.625% 6/1/2025
Oracle Corp.   3.6% 4/1/2040
Citigroup Inc.   3.106% 4/8/2026
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.69% 2.02% -4.80% -2.33% -1.75% 4.57%
Mining 1.17% 2.39% -9.48% -9.03% -8.80% 0.17%
Construction 0.76% 1.78% -8.44% -5.62% -5.22% 2.47%
Manufacturing 1.06% 1.46% -4.39% -0.15% 0.04% 8.36%
Transportion, Communication, Electric/Gas 1.20% 1.95% -5.76% -1.38% -1.13% 8.72%
Wholesale 1.10% 1.34% -6.39% -2.97% -2.82% 5.81%
Retail 1.37% 1.82% -4.42% 0.42% 0.40% 9.66%
Finance, Insurance, Real-Estate 0.58% 0.92% -4.13% -1.04% -0.84% 6.13%
Services 1.07% 1.22% -4.84% -0.43% -0.22% 8.08%
Public Administration 0.08% -0.12% -0.10% 3.12% 3.25% 6.16%
Energy 1.16% 2.74% -9.13% -9.36% -9.20% -0.96%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]

(None Current 04/13/2020)
Additional Commentary

NEW ISSUANCE WATCH: on 04/03/2020 participants welcome a $1000MM new corporate-bond offering by NiSource Inc.
Top Widening Loans Top Narrowing Loans
Donnelley Financial Solutions Inc (USD) TLB L+300 09/29/2023
Wittur (EUR) TLB E+450 09/23/2026
Arvos Holding (EUR) TLB2 E+450 08/29/2021
Epic Y-Grade (USD) TLB L+600 06/13/2024
Bartec Holding GmbH (EUR) TLC5 06/30/2022
Prosol Gestion (EUR) TLB E+400 04/21/2024
Sebia SA (EUR) TLB E+300 10/24/2024
Duff & Phelps LLC (USD) TL L+375 03/06/2027
Help/Systems LLC (USD) TL 10/30/2027
BCA Marketplace PLC (EUR) TLB2 E+325 09/24/2026

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 100 bp (basis points), as of 04/14/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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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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