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North American Bond Research – April 17, 2020

Posted on April 17, 2020
HIGH YIELD BOND RESEARCH
April 17, 2020
Bond Markets

MARKETS SURGED AS CORONA VIRUS CASES AND DEATHS LEVEL OFF AND NEWS THAT ECONOMIES ARE PUTTING IN PLACE PLANS TO SLOWLY OPEN SOON. 10 Year Treasury notes were down 2.9 basis points. S&P +2.68%, Dow +2.99%, NASDAQ +1.38%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 2.2 MILLION+ CASES AND 151000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 690000+ CASES AND 36000+ 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
+   Western Gas Partners LP 5.3% 3/1/2048 +0.3%
  Occidental Petroleum Corp. 2.9% 8/15/2024 +0.0%
  Nabors Industries LTD 4.625% 9/15/2021 (1) +3.5%
  Jabil Circuit Inc. 4.7% 9/15/2022 +0.2%
  EQT Corp. 7% 2/1/2030 +0.5%
–   Ford Motor Credit Co. 3.336% 3/18/2021 -0.0%
  Occidental Petroleum Corp. 6.2% 3/15/2040 -2.4%
  SpringLeaf Finance Corp. 7.125% 3/15/2026 -0.2%
  EQT Midstream Partners LP 4.75% 7/15/2023 -0.2%
  Targa Resources Partners LP 5.875% 4/15/2026 -0.5%
Western Gas Partners LP   5.3% 3/1/2048
Occidental Petroleum Corp.   2.9% 8/15/2024
Nabors Industries LTD   4.625% 9/15/2021 (1)
Jabil Circuit Inc.   4.7% 9/15/2022
EQT Corp.   7% 2/1/2030
Intelsat Jackson Hldg SA   5.5% 8/1/2023 (1)
Ford Motor Co.   4.75% 1/15/2043
Ford Motor Credit Co.   3.336% 3/18/2021
Occidental Petroleum Corp.   2.7% 8/15/2022
Ford Motor Credit Co.   5.113% 5/3/2029
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.17% 4.14% 5.77% -6.27% -5.36% 5.42%
Mining -0.43% 1.24% -3.26% -31.99% -31.58% -22.44%
Construction 0.27% 2.66% -2.66% -6.80% -6.05% 2.78%
Manufacturing 0.05% 2.85% 1.25% -6.55% -5.58% 2.06%
Transportion, Communication, Electric/Gas 0.20% 2.67% 3.82% -5.08% -4.18% 3.26%
Wholesale 0.31% 2.99% -0.66% -11.36% -10.33% -3.70%
Retail -0.07% 2.46% -2.27% -11.29% -10.47% -0.49%
Finance, Insurance, Real-Estate 0.16% 2.23% -1.59% -8.01% -7.13% 0.80%
Services 0.16% 3.14% 1.76% -6.74% -5.96% 2.43%
Public Administration -0.74% 4.60% 1.04% -8.68% -8.34% 0.48%
Energy -0.20% 2.43% -0.96% -30.34% -29.78% -21.75%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Hilton Domestic Operating Co. (USD) 5.375% 5/1/2025 144A (04/16/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.38%.

2. Hilton Domestic Operating Co. (USD) 5.75% 5/1/2028 144A (04/16/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.75%.

3. Hilton Domestic Operating Co. (USD) 5.375% 5/1/2025 Reg S (04/16/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.38%.

4. Hilton Domestic Operating Co. (USD) 5.75% 5/1/2028 Reg S (04/16/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.75%.

5. Change Healthcare Hldgs LLC (USD) 5.75% 3/1/2025 (04/16/2020): 325MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.75%.

6. CDW LLC CDW Finance Corp. (USD) 4.125% 5/1/2025 (04/16/2020): 600MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.125%.

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: Hilton Domestic Operating Co issued $2000 MM bonds.
Top Widening Loans Top Narrowing Loans
Montreign Operating Co. LLC (USD) TLB L+825 01/24/2023
Epic Y-Grade (USD) TLB L+600 06/13/2024
Nemera (EUR) TLB E+400 01/22/2026
Electro Rent Corp. (USD) TL L+500 01/31/2024
Allnex Sarl (USD) TB2 L+325 09/13/2023
ATI Holdings (USD) TLB L+350 05/10/2023
TI Automotive LTD (USD) TLB L+275 06/30/2022
Upstream Rehabilitation (USD) TL L+450 10/24/2026
Ineos Finance PLC (EUR) TLB E+200 03/31/2024
Logoplaste (EUR) TLB E+400 10/31/2023

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 04/17/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
April 17, 2020
Bond Markets

MARKETS SURGED AS CORONA VIRUS CASES AND DEATHS LEVEL OFF AND NEWS THAT ECONOMIES ARE PUTTING IN PLACE PLANS TO SLOWLY OPEN SOON. 10 Year Treasury notes were down 2.9 basis points. S&P +2.68%, Dow +2.99%, NASDAQ +1.38%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 2.2 MILLION+ CASES AND 151000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 690000+ CASES AND 36000+ 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
+   Oracle Corp. 2.95% 4/1/2030 +0.3%
  Marriott Intl Inc. 5.75% 5/1/2025 +1.3%
  Exxon Mobil Corp. 3.452% 4/15/2051 +0.8%
  Dollar Tree Stores Inc. 3.7% 5/15/2023 +0.1%
  JPMorgan Chase & Co. VAR% 4/22/2051 +0.3%
–   General Electric Co. 4.35% 5/1/2050 -0.4%
  Fortive Corp. 0.875% 2/15/2022 -0.9%
  Expedia Group Inc. 3.25% 2/15/2030 -3.1%
  Equinor ASA 2.875% 4/6/2025 -0.3%
  Bank of America Corp. 2.496% 2/13/2031 -0.3%
General Electric Co.   4.35% 5/1/2050
Oracle Corp.   2.95% 4/1/2030
Marriott Intl Inc.   5.75% 5/1/2025
Fortive Corp.   0.875% 2/15/2022
Expedia Group Inc.   3.25% 2/15/2030
Exxon Mobil Corp.   3.452% 4/15/2051
Dollar Tree Stores Inc.   3.7% 5/15/2023
JPMorgan Chase & Co.   VAR% 4/22/2051
Equinor ASA   2.875% 4/6/2025
FedEx Corp.   3.8% 5/15/2025
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.80% 2.05% 0.61% -0.60% 0.11% 5.04%
Mining 0.16% 3.42% 1.91% -6.10% -5.38% 3.18%
Construction 0.36% 2.47% -1.91% -2.14% -1.29% 6.24%
Manufacturing 0.20% 2.22% 2.57% 1.55% 2.31% 10.58%
Transportion, Communication, Electric/Gas 0.49% 3.65% 4.48% 1.69% 2.74% 12.78%
Wholesale 0.27% 2.56% 0.37% -1.02% -0.33% 8.73%
Retail 0.29% 2.60% 3.12% 2.49% 2.95% 12.61%
Finance, Insurance, Real-Estate 0.09% 1.80% 1.43% 0.44% 1.03% 8.03%
Services 0.21% 2.18% 2.04% 1.23% 1.94% 10.41%
Public Administration 0.06% 0.23% 0.36% 3.23% 3.49% 6.38%
Energy 0.33% 4.09% 3.14% -6.23% -5.67% 2.63%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. National Secs Clearing (USD) 1.5% 4/23/2025 144A (04/16/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.803, Yielding 1.54%.

2. Costco Wholesale Corp. (USD) 1.375% 6/20/2027 (04/16/2020): 1250MM Senior Unsecured Notes, Price at Issuance 99.775, Yielding 1.41%.

3. Jefferies Group Inc. (EUR) 4.5% 5/4/2040 (04/16/2020): 50MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.5%.

4. Camden Property Trust (USD) 2.8% 5/15/2030 (04/16/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.929, Yielding 2.81%.

5. National Secs Clearing (USD) 1.5% 4/23/2025 Reg S (04/16/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.803, Yielding 1.54%.

6. National Secs Clearing (USD) 1.2% 4/23/2023 Reg S (04/16/2020): 1000MM Senior Unsecured Notes.

7. Toyota Credit Canada Inc. (CAD) 2.31% 10/23/2024 (04/16/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.97, Yielding 2.32%.

8. Bank of NY Mellon Corp. (USD) 1.6% 4/24/2025 (04/17/2020): 1250MM Senior Unsecured Notes, Price at Issuance 99.962, Yielding 1.61%.

9. Aeroports de Montreal (CAD) 3.03% 4/21/2050 (04/17/2020): 500MM Secured Notes, Price at Issuance 100, Yielding 3.03%.

10. National Secs Clearing (USD) 1.2% 4/23/2023 144A (04/17/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.906, Yielding 1.23%.

Additional Commentary

NEW ISSUANCE WATCH: on 04/17/2020 participants welcome a $1250MM new corporate-bond offering by Costco Wholesale Corp.
Top Widening Loans Top Narrowing Loans
Montreign Operating Co. LLC (USD) TLB L+825 01/24/2023
Epic Y-Grade (USD) TLB L+600 06/13/2024
Nemera (EUR) TLB E+400 01/22/2026
Electro Rent Corp. (USD) TL L+500 01/31/2024
Allnex Sarl (USD) TB2 L+325 09/13/2023
ATI Holdings (USD) TLB L+350 05/10/2023
TI Automotive LTD (USD) TLB L+275 06/30/2022
Upstream Rehabilitation (USD) TL L+450 10/24/2026
Ineos Finance PLC (EUR) TLB E+200 03/31/2024
Logoplaste (EUR) TLB E+400 10/31/2023

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 04/17/2020
  • 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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