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North American Bond Research – April 2, 2020

Posted on April 2, 2020
HIGH YIELD BOND RESEARCH
April 2, 2020
Bond Markets

MARKETS WERE UP, DESPITE HUGE JOB LOSSES WHEN PRESIDENT TRUMP STATED THAT THE OIL WAR WAS CLOSE TO OVER. PEOPLE ARE SPECULATING THAT TRUMP WANTS TO FORM A GRAND PARTNERSHIP WITH RUSSIA AND SAUDI ARABIA. 10 Year Treasury notes were down 0.8 basis points. S&P +2.28%, Dow +2.24%, NASDAQ +1.72%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 1030000+ CASES AND 53000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 245000+ CASES AND 6000+ 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
+   Charter Communications Operating LLC 4.8% 3/1/2050 +0.4%
  Whiting Petroleum Corp. 6.625% 1/15/2026 +143.8%
  Callon Petroleum Co. 6.125% 10/1/2024 +25.0%
  Carrizo Oil & Gas Inc. 6.25% 4/15/2023 +5.3%
  HCA Inc. 4.75% 5/1/2023 +0.3%
–   Petrobras Global Finance BV 7.375% 1/17/2027 -0.9%
  American General Finance Corp. 7.75% 10/1/2021 -1.8%
  Oasis Petroleum Inc. 6.875% 3/15/2022 (1) -14.5%
  T-Mobile USA Inc. 4.75% 2/1/2028 -0.3%
  Sprint Nextel Corp. 6% 11/15/2022 -0.0%
Charter Communications Operating LLC   4.8% 3/1/2050
Petrobras Global Finance BV   7.375% 1/17/2027
Whiting Petroleum Corp.   6.625% 1/15/2026
American General Finance Corp.   7.75% 10/1/2021
Callon Petroleum Co.   6.125% 10/1/2024
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.02% 7.90% -12.17% -11.81% -11.79% -1.33%
Mining -1.04% 2.11% -35.99% -39.99% -39.98% -32.20%
Construction -0.21% 1.84% -11.07% -9.44% -9.43% 0.28%
Manufacturing -0.34% 5.36% -10.49% -9.83% -9.82% -1.17%
Transportion, Communication, Electric/Gas -0.46% 4.74% -11.37% -10.46% -10.44% -1.17%
Wholesale -0.52% 3.42% -13.74% -13.76% -13.74% -4.78%
Retail -0.52% 4.05% -15.29% -15.25% -15.23% -2.83%
Finance, Insurance, Real-Estate -0.20% 4.86% -11.00% -10.22% -10.21% -0.40%
Services -0.46% 5.68% -11.27% -10.98% -10.97% -1.70%
Public Administration -1.00% 9.47% -13.30% -12.09% -12.07% -3.70%
Energy -0.86% 2.28% -36.35% -39.68% -39.67% -32.83%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 04/02/2020)
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
Cabot Microelectronics Corp. (USD) TLB L+200 11/15/2025
Olam Intl. LTD (USD) RC 09/28/2021
Tata Steel LTD (USD) TLA L+200 06/21/2024
Arvos Holding (EUR) TLB2 E+450 08/29/2021
B&M Retail LTD (GBP) TLA L+200 07/31/2021
New Arclin US Holding Corp (USD) TL L+875 02/14/2025
AI Convoy Luxembourg Sarl (USD) TL L+350 01/20/2027
Applovin Corp. (USD) TLB L+375 08/15/2025
Ascend Performance Materials LLC (USD) TLB L+525 08/27/2026
Hamilton Holdco LLC (USD) TLB L+200 01/02/2027

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  137 bp (basis points), as of 04/2/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
April 2, 2020
Bond Markets

MARKETS WERE UP, DESPITE HUGE JOB LOSSES WHEN PRESIDENT TRUMP STATED THAT THE OIL WAR WAS CLOSE TO OVER. PEOPLE ARE SPECULATING THAT TRUMP WANTS TO FORM A GRAND PARTNERSHIP WITH RUSSIA AND SAUDI ARABIA. 10 Year Treasury notes were down 0.8 basis points. S&P +2.28%, Dow +2.24%, NASDAQ +1.72%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 1030000+ CASES AND 53000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 245000+ CASES AND 6000+ 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
+   Oracle Corp. 3.6% 4/1/2050 +1.8%
  Oracle Corp. 3.6% 4/1/2040 +0.2%
  Visa Inc. 2.7% 4/15/2040 +0.2%
  Oracle Corp. 2.5% 4/1/2025 +0.2%
  HSBC Hldg PLC 4.95% 3/31/2030 +0.0%
  Oracle Corp. 3.85% 4/1/2060 +0.5%
–   Toyota Motor Credit Corp. 3.375% 4/1/2030 -5.2%
  Goldman Sachs Group Inc. 3.5% 4/1/2025 -0.2%
  TJX Cos. Inc. 3.875% 4/15/2030 -0.3%
  Lowe’s Companies Inc. 5.125% 4/15/2050 -1.0%
  Wells Fargo & Co. 5.013% 4/4/2051 -0.6%
Oracle Corp.   3.6% 4/1/2050
Toyota Motor Credit Corp.   3.375% 4/1/2030
Goldman Sachs Group Inc.   3.5% 4/1/2025
Oracle Corp.   3.6% 4/1/2040
Visa Inc.   2.7% 4/15/2040
TJX Cos. Inc.   3.875% 4/15/2030
Oracle Corp.   2.5% 4/1/2025
HSBC Hldg PLC   4.95% 3/31/2030
Lowe’s Companies Inc.   5.125% 4/15/2050
Wells Fargo & Co.   5.013% 4/4/2051
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.68% 1.96% -6.67% -3.24% -3.23% 4.10%
Mining -0.33% 2.68% -16.93% -14.92% -14.91% -3.40%
Construction 0.36% 2.50% -10.46% -7.31% -7.30% 0.79%
Manufacturing 0.03% 3.63% -4.63% -1.44% -1.43% 7.28%
Transportion, Communication, Electric/Gas 0.29% 4.98% -7.07% -3.11% -3.10% 7.06%
Wholesale -0.15% 2.34% -6.41% -4.07% -4.06% 4.72%
Retail 0.16% 4.02% -5.14% -1.77% -1.76% 7.57%
Finance, Insurance, Real-Estate 0.00% 2.99% -4.29% -1.64% -1.62% 5.74%
Services 0.03% 3.35% -4.71% -1.47% -1.46% 7.31%
Public Administration 0.04% 0.39% 1.39% 3.35% 3.35% 6.10%
Energy -0.09% 3.55% -16.41% -14.43% -14.42% -4.30%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. TransCanada PipeLines LTD (CAD) 3.8% 4/5/2027 (04/01/2020): 2000MM Senior Unsecured Notes, Price at Issuance 99.841, Yielding 3.83%.

2. Equinor ASA (USD) 3% 4/6/2027 (04/01/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.506, Yielding 3.08%.

3. Penske Truck Leasing (USD) 4% 7/15/2025 144A (04/01/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.676, Yielding 4.07%.

4. Dollar General Corp. (USD) 3.5% 4/3/2030 (04/01/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.933, Yielding 3.51%.

5. Dollar General Corp. (USD) 4.125% 4/3/2050 (04/01/2020): 500MM Senior Unsecured Notes, Price at Issuance 98.997, Yielding 4.18%.

6. PPL Capital Funding Inc. (USD) 4.125% 4/15/2030 (04/01/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.966, Yielding 4.13%.

7. NextEra Energy Capital Holding Inc. (USD) 2.75% 5/1/2025 (04/01/2020): 1250MM Senior Unsecured Notes, Price at Issuance 99.858, Yielding 2.78%.

8. Anheuser-Busch Inbev Worldwide Inc. (USD) 4.5% 6/1/2050 (04/01/2020): 2250MM Senior Unsecured Notes, Price at Issuance 99.924, Yielding 4.5%.

9. Anheuser-Busch Inbev Worldwide Inc. (USD) 4.6% 6/1/2060 (04/01/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.916, Yielding 4.6%.

10. Anheuser-Busch Inbev Worldwide Inc. (USD) 3.5% 6/1/2030 (04/01/2020): 1750MM Senior Unsecured Notes, Price at Issuance 99.79, Yielding 3.52%.

Additional Commentary

NEW ISSUANCE WATCH: on 04/02/2020 participants welcome a $5000MM new corporate-bond offering by Anheuser-Busch Imbev WorldwideThe 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
Cabot Microelectronics Corp. (USD) TLB L+200 11/15/2025
Olam Intl. LTD (USD) RC 09/28/2021
Tata Steel LTD (USD) TLA L+200 06/21/2024
Arvos Holding (EUR) TLB2 E+450 08/29/2021
B&M Retail LTD (GBP) TLA L+200 07/31/2021
New Arclin US Holding Corp (USD) TL L+875 02/14/2025
AI Convoy Luxembourg Sarl (USD) TL L+350 01/20/2027
Applovin Corp. (USD) TLB L+375 08/15/2025
Ascend Performance Materials LLC (USD) TLB L+525 08/27/2026
Hamilton Holdco LLC (USD) TLB L+200 01/02/2027

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 137 bp (basis points), as of 04/2/2020
  • 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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