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North American Bond Research – April 15, 2020

Posted on April 15, 2020
HIGH YIELD BOND RESEARCH
April 15, 2020
Bond Markets
MARKETS ROUTED AS RETAIL NUMBERS SHOW AN 8.7% DECLINE FOR THE MONTH OF MARCH. STORES, GASOLINE STATIONS, RESTAURANTS, BARS AND ONLINE SHOPPING WERE ALL VERY NEGATIVELY AFFECTED. APRIL IS EXPECTED TO BE FAR WORSE. 10 Year Treasury notes were down 11.6 basis points. S&P -2.2%, Dow -1.86%, NASDAQ -1.44%.

CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 2.1 MILLION+ CASES AND 134000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 640000+ CASES AND 28000+ 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
+   Frontier Communications Corp. 11% 9/15/2025 +3.8%
  Crown Castle Intl Corp. 5.25% 1/15/2023 +0.6%
  Avon Products Inc. 6.95% 3/15/2043 +3.7%
  Frontier Communications Corp. 10.5% 9/15/2022 +3.3%
  Intelsat Jackson Hldg SA 5.5% 8/1/2023 (1) +1.1%
–   Occidental Petroleum Corp. 2.7% 8/15/2022 -4.2%
  Occidental Petroleum Corp. 3.125% 2/15/2022 -5.4%
  EQT Corp. 3.9% 10/1/2027 -2.4%
  Ally Financial Inc. 3.875% 5/21/2024 -2.5%
  Occidental Petroleum Corp. 2.6% 8/13/2021 -1.9%
Occidental Petroleum Corp.   2.7% 8/15/2022
Frontier Communications Corp.   11% 9/15/2025
Occidental Petroleum Corp.   3.125% 2/15/2022
EQT Corp.   3.9% 10/1/2027
Ally Financial Inc.   3.875% 5/21/2024
Crown Castle Intl Corp.   5.25% 1/15/2023
Occidental Petroleum Corp.   2.6% 8/13/2021
EQT Corp.   3% 10/1/2022
Petrobras Global Finance BV   7.375% 1/17/2027
Gap Inc.   5.95% 4/12/2021
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 1.69% 5.10% 0.94% -7.48% -6.60% 3.71%
Mining 1.01% 6.17% -10.00% -32.33% -31.78% -22.46%
Construction 0.66% 4.11% -4.42% -7.13% -6.36% 3.07%
Manufacturing 1.02% 5.38% -1.61% -6.82% -5.94% 1.82%
Transportion, Communication, Electric/Gas 0.87% 5.42% 0.62% -4.75% -4.03% 3.90%
Wholesale 1.11% 3.91% -3.86% -11.14% -10.23% -3.12%
Retail 0.63% 5.67% -5.66% -11.30% -10.63% -0.53%
Finance, Insurance, Real-Estate 1.01% 4.64% -4.01% -8.45% -7.67% 0.80%
Services 0.86% 5.72% -1.59% -7.29% -6.59% 1.94%
Public Administration 4.01% 4.36% -0.72% -8.51% -8.47% 0.23%
Energy 1.35% 7.27% -8.39% -30.54% -29.88% -21.98%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Sabre GLBL Inc. (USD) 9.25% 4/15/2025 144A (04/14/2020): 775MM Secured Notes, Price at Issuance 100, Yielding 9.25%.

2. Spirit Aerosystems Inc. (USD) 7.5% 4/15/2025 Reg S (04/14/2020): 1200MM Second Lien Notes, Price at Issuance 100, Yielding 7.5%.

3. Spirit Aerosystems Inc. (USD) 7.5% 4/15/2025 144A (04/15/2020): 1200MM Second Lien Notes, Price at Issuance 100, Yielding 7.5%.

4. HAT Hldg I LLC Hat Hldg II LLC (USD) 6% 4/15/2025 144A (04/15/2020): 400MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6%.

5. HAT Hldg I LLC Hat Hldg II LLC (USD) 6% 4/15/2025 Reg S (04/15/2020): 400MM Senior Unsecured , Price at Issuance 100, Yielding 6%.

 1. Open Lending LLC: $225MM TLB

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

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

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

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

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. Service Logic: $140MM bank debt: $40MM TL; $100MM DD TL
Additional Commentary
NEW ISSUANCE WATCH: Sabre GLBL Inc. issued $775MM bonds.
Top Widening Loans Top Narrowing Loans
Ascent Resources Marcellus LLC (USD) TL EXT L+650 12/31/2049
NCL Corp. LTD (USD) TLA L+150 01/02/2024
Tenneco Inc. (USD) TLA L+175 10/01/2023
Allnex Sarl (USD) TB2 L+325 09/13/2023
Arvos Holding (EUR) TLB2 E+450 08/29/2021		 CB Richard Ellis Services Inc. (USD) TLA L+100 03/04/2024
Concordia International (EUR) TL E+525 09/06/2024
TI Automotive LTD (USD) TLB L+275 06/30/2022
Ball Corp. (USD) TLA L+150 03/21/2024
Altra Industrial Motion Inc. (USD) TL L+200 10/01/2025

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  101 bp (basis points), as of 04/15/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
April 15, 2020
Bond Markets
MARKETS ROUTED AS RETAIL NUMBERS SHOW AN 8.7% DECLINE FOR THE MONTH OF MARCH. STORES, GASOLINE STATIONS, RESTAURANTS, BARS AND ONLINE SHOPPING WERE ALL VERY NEGATIVELY AFFECTED. APRIL IS EXPECTED TO BE FAR WORSE. 10 Year Treasury notes were down 11.6 basis points. S&P -2.2%, Dow -1.86%, NASDAQ -1.44%.

CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 2.1 MILLION+ CASES AND 134000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 640000+ CASES AND 28000+ 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
+   General Electric Co. 4.35% 5/1/2050 +0.1%
  Exxon Mobil Corp. 2.61% 10/15/2030 +0.2%
  Cigna Corp. 3.4% 3/15/2050 +1.6%
  General Electric Co. 3.45% 5/1/2027 +0.3%
  CVS Health Corp. 5.05% 3/25/2048 +0.5%
–   Exxon Mobil Corp. 3.452% 4/15/2051 -0.1%
  General Electric Co. 3.625% 5/1/2030 -0.1%
  Exxon Mobil Corp. 1.571% 4/15/2023 -0.2%
  Prudential PLC 3.125% 4/14/2030 -0.6%
  Oracle Corp. 3.6% 4/1/2050 -0.4%
General Electric Co.   4.35% 5/1/2050
Exxon Mobil Corp.   2.61% 10/15/2030
Exxon Mobil Corp.   3.452% 4/15/2051
General Electric Co.   3.625% 5/1/2030
Cigna Corp.   3.4% 3/15/2050
Exxon Mobil Corp.   1.571% 4/15/2023
General Electric Co.   3.45% 5/1/2027
Prudential PLC   3.125% 4/14/2030
CVS Health Corp.   5.05% 3/25/2048
HSBC Hldg PLC   4.95% 3/31/2030
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.71% 3.21% -1.28% -1.19% -0.21% 4.75%
Mining 0.61% 3.58% -0.16% -7.06% -6.42% 2.25%
Construction 0.30% 2.76% -2.90% -4.28% -3.68% 4.74%
Manufacturing 0.51% 3.44% 1.45% 1.11% 1.73% 10.07%
Transportion, Communication, Electric/Gas 0.80% 4.23% 2.32% 0.70% 1.47% 11.45%
Wholesale 0.53% 3.61% -1.21% -1.67% -1.13% 7.73%
Retail 0.48% 3.54% 1.37% 1.59% 1.94% 11.24%
Finance, Insurance, Real-Estate 0.56% 2.53% 0.30% 0.12% 0.61% 7.78%
Services 0.35% 3.13% 0.68% 0.77% 1.35% 9.73%
Public Administration 0.24% 0.05% 0.44% 3.09% 3.31% 6.26%
Energy 0.95% 4.65% 1.29% -6.83% -6.36% 1.79%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Valero Energy Corp. (USD) 2.7% 4/15/2023 (04/14/2020): 850MM Senior Unsecured Notes, Price at Issuance 99.889, Yielding 2.74%.

2. USAA Capital Corp. (USD) 1.5% 5/1/2023 (04/14/2020): 400MM Senior Unsecured Notes, Price at Issuance 99.876, Yielding 1.54%.

3. USAA Capital Corp. (USD) 2.125% 5/1/2030 (04/14/2020): 400MM Senior Unsecured Notes, Price at Issuance 99.712, Yielding 2.16%.

4. Charter Communications Operating LLC (USD) 3.7% 4/1/2051 (04/14/2020): 1400MM Secured Notes, Price at Issuance 99.217, Yielding 3.74%.

5. Charter Communications Operating LLC (USD) 2.8% 4/1/2031 (04/14/2020): 1600MM Secured Notes, Price at Issuance 99.561, Yielding 2.85%.

6. Marriott International Inc. (USD) 5.75% 5/1/2025 (04/14/2020): 1600MM Senior Unsecured Notes, Price at Issuance 99.996, Yielding 5.75%.

7. Bank of Nova Scotia (USD) 1.625% 5/1/2023 (04/14/2020): 1250MM Senior Unsecured Notes, Price at Issuance 99.84, Yielding 1.68%.

8. Pres & Fellows of Harvar (USD) 2.517% 10/15/2050 (04/14/2020): 500MM Unsecured Notes, Price at Issuance 100, Yielding 2.52%.

9. DXC Technology Company (USD) 4% 4/15/2023 (04/14/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.884, Yielding 4.04%.

10. DXC Technology Company (USD) 4.125% 4/15/2025 (04/14/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.791, Yielding 4.17%.
Additional Commentary
NEW ISSUANCE WATCH: on 04/15/2020 participants welcome a $1250MM new corporate-bond offering by Bank of Nova Scotia.
Top Widening Loans Top Narrowing Loans
Ascent Resources Marcellus LLC (USD) TL EXT L+650 12/31/2049
NCL Corp. LTD (USD) TLA L+150 01/02/2024
Tenneco Inc. (USD) TLA L+175 10/01/2023
Allnex Sarl (USD) TB2 L+325 09/13/2023
Arvos Holding (EUR) TLB2 E+450 08/29/2021		 CB Richard Ellis Services Inc. (USD) TLA L+100 03/04/2024
Concordia International (EUR) TL E+525 09/06/2024
TI Automotive LTD (USD) TLB L+275 06/30/2022
Ball Corp. (USD) TLA L+150 03/21/2024
Altra Industrial Motion Inc. (USD) TL L+200 10/01/2025

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 101 bp (basis points), as of 04/15/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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

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