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North American Bond Research – April 21, 2020

Posted on April 21, 2020
HIGH YIELD BOND RESEARCH
April 21, 2020
Bond Markets

OIL PRICE COLLAPSE ARE CAUSING MARKETS TO FALL. MAY OIL CONTRACTS FELL TO ZERO YESTERDAY AND THE JUNE OIL CONTRACTS HAVE FALLEN TO $13.51 A BARREL TODAY. THE LACK OF STORAGE IS EXACERBATING THE SITUATION.  10 Year Treasury notes were down 5.5 basis points. S&P -3.07%, Dow -2.67%, NASDAQ -3.48%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 2.5 MILLION+ CASES AND 176000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 780000+ CASES AND 42000+ 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
+   Sabine Pass Liquefaction LLC 5.625% 3/1/2025 +1.5%
  EPR Properties 5.25% 7/15/2023 +3.5%
  Intl Lease Finance Corp. 5.875% 8/15/2022 +1.0%
  Transocean Inc. 6.5% 11/15/2020 +8.4%
  Sally Hldg LLC 5.625% 12/1/2025 +0.5%
–   Ford Motor Co. 8.5% 4/21/2023 -0.6%
  Ford Motor Co. 9% 4/22/2025 -0.5%
  Ford Motor Co. 9.625% 4/22/2030 -5.2%
  JBS Investments GmbH 5.75% 7/30/2028 Reg S -3.0%
  Targa Resources Partners LP 5.375% 2/1/2027 -6.3%
Ford Motor Co.   8.5% 4/21/2023
Ford Motor Co.   9% 4/22/2025
Ford Motor Co.   9.625% 4/22/2030
JBS Investments GmbH   5.75% 7/30/2028 Reg S
Targa Resources Partners LP   5.375% 2/1/2027
Sabine Pass Liquefaction LLC   5.625% 3/1/2025
EPR Properties   5.25% 7/15/2023
Western Digital Corp.   4.75% 2/15/2026
Intl Lease Finance Corp.   5.875% 8/15/2022
CNH Industrial NV   4.875% 4/1/2021
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.36% 3.09% 16.74% -6.46% -5.34% 5.35%
Mining -2.29% -3.44% 13.76% -33.88% -33.47% -23.73%
Construction -0.13% 1.19% 4.34% -6.64% -5.73% 3.08%
Manufacturing -0.11% 1.27% 12.94% -6.64% -5.51% 2.00%
Transportion, Communication, Electric/Gas -0.11% 1.75% 15.70% -4.35% -3.37% 4.10%
Wholesale 0.24% 2.62% 10.60% -10.01% -8.79% -1.87%
Retail -0.12% 0.04% 7.67% -11.29% -10.37% -1.26%
Finance, Insurance, Real-Estate -0.04% 1.61% 9.29% -8.01% -7.05% 0.71%
Services -0.01% 1.82% 12.20% -7.04% -6.10% 2.55%
Public Administration 1.67% 5.26% 9.24% -8.15% -7.37% 1.12%
Energy -2.09% -1.96% 17.42% -31.73% -31.18% -22.91%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Cedar Fair LP (USD) 5.5% 5/1/2025 144A (04/20/2020): 1000MM First Lien Notes, Price at Issuance 100, Yielding 5.5%.

2. Cedar Fair LP (USD) 5.5% 5/1/2025 Reg S (04/20/2020): 1000MM First Lien Notes, Price at Issuance 100, Yielding 5.5%.

3. Adient US LLC (USD) 9% 4/15/2025 144A (04/20/2020): 600MM First Lien Notes, Price at Issuance 100, Yielding 9%.

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: Cedar Fair LP issued 2000MM in Notes.
Top Widening Loans Top Narrowing Loans
New LightSquared LLC (USD) TL PIK L+875 12/07/2020
Action Nederland BV (EUR) TL E+375 01/17/2027
ConvergeOne LLC (USD) TL L+500 01/04/2026
Amynta (USD) TL L+450 02/28/2025
Nets Hldgs AS (EUR) TLB2 E+375 02/06/2025
Big River Steel LLC (USD) TLB L+500 08/15/2023
ATI Holdings (USD) TLB L+350 05/10/2023
Ventia Pty Ltd (USD) TLB L+350 05/21/2026
Prometric Inc. (USD) TL L+300 01/19/2025
Tempo Acquisition LLC/FI (USD) TLB L+300 05/01/2024

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 04/21/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
April 21, 2020
Bond Markets

OIL PRICE COLLAPSE ARE CAUSING MARKETS TO FALL. MAY OIL CONTRACTS FELL TO ZERO YESTERDAY AND THE JUNE OIL CONTRACTS HAVE FALLEN TO $13.51 A BARREL TODAY. THE LACK OF STORAGE IS EXACERBATING THE SITUATION.  10 Year Treasury notes were down 5.5 basis points. S&P -3.07%, Dow -2.67%, NASDAQ -3.48%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 2.5 MILLION+ CASES AND 176000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 780000+ CASES AND 42000+ 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
+   Booking Hldgs Inc. 4.625% 4/13/2030 +0.6%
  General Electric Co. 4.35% 5/1/2050 +0.4%
  Booking Hldgs Inc. 4.5% 4/13/2027 +1.5%
  Oracle Corp. 2.95% 4/1/2030 +0.1%
  Costco Wholesale Corp. 1.6% 4/20/2030 +0.1%
–   Ford Motor Co. 8.5% 4/21/2023 -1.7%
  Ford Motor Co. 9% 4/22/2025 -0.5%
  Marriott Intl Inc. 5.75% 5/1/2025 -1.8%
  Exxon Mobil Corp. 2.61% 10/15/2030 -0.6%
  Ford Motor Co. 9.625% 4/22/2030 -4.7%
Ford Motor Co.   8.5% 4/21/2023
Ford Motor Co.   9% 4/22/2025
Marriott Intl Inc.   5.75% 5/1/2025
Booking Hldgs Inc.   4.625% 4/13/2030
Costco Wholesale Corp.   1.6% 4/20/2030
General Electric Co.   4.35% 5/1/2050
Booking Hldgs Inc.   4.5% 4/13/2027
Exxon Mobil Corp.   2.61% 10/15/2030
Oracle Corp.   2.95% 4/1/2030
Exxon Mobil Corp.   3.452% 4/15/2051
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.56% 1.73% 5.35% -0.26% 0.54% 5.09%
Mining -0.25% 1.46% 11.67% -6.90% -6.19% 2.53%
Construction 0.22% 1.94% 5.36% -1.19% -0.26% 6.92%
Manufacturing -0.04% 1.13% 11.20% 1.53% 2.32% 10.62%
Transportion, Communication, Electric/Gas 0.00% 2.38% 14.72% 1.88% 2.92% 12.55%
Wholesale 0.02% 1.43% 6.99% -0.78% -0.05% 8.60%
Retail 0.02% 1.34% 11.00% 2.33% 2.84% 12.35%
Finance, Insurance, Real-Estate -0.05% 0.98% 7.64% 0.35% 0.99% 8.03%
Services -0.07% 1.23% 10.20% 1.20% 1.92% 10.38%
Public Administration 0.04% 0.48% 0.62% 3.29% 3.57% 6.37%
Energy -0.28% 2.17% 14.06% -6.55% -5.99% 2.25%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Sonoco Products Co. (USD) 3.125% 5/1/2030 (04/20/2020): 600MM Senior Unsecured Notes, Price at Issuance 99.888, Yielding 3.14%.

2. Cargill Inc. (USD) 1.375% 7/23/2023 144A (04/20/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.896, Yielding 1.41%.

3. Cargill Inc. (USD) 2.125% 4/23/2030 144A (04/20/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.884, Yielding 2.14%.

4. Cargill Inc. (USD) 1.375% 7/23/2023 Reg S (04/20/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.896, Yielding 1.41%.

5. Cargill Inc. (USD) 2.125% 4/23/2030 Reg S (04/20/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.884, Yielding 2.14%.

6. Kansas City Southern (USD) 3.5% 5/1/2050 (04/20/2020): 550MM Senior Unsecured Notes, Price at Issuance 99.208, Yielding 3.54%.

7. Campbell Soup Co. (USD) 2.375% 4/24/2030 (04/20/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.991, Yielding 2.38%.

8. Campbell Soup Co. (USD) 3.125% 4/24/2050 (04/20/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.729, Yielding 3.14%.

9. Shaw Communications Inc. (CAD) 2.9% 12/9/2030 (04/20/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.815, Yielding 2.92%.

Additional Commentary

NEW ISSUANCE WATCH: on 04/21/2020 participants welcome a $3000MM new corporate-bond offering by Cargill Inc.
Top Widening Loans Top Narrowing Loans
New LightSquared LLC (USD) TL PIK L+875 12/07/2020
Action Nederland BV (EUR) TL E+375 01/17/2027
ConvergeOne LLC (USD) TL L+500 01/04/2026
Amynta (USD) TL L+450 02/28/2025
Nets Hldgs AS (EUR) TLB2 E+375 02/06/2025
Big River Steel LLC (USD) TLB L+500 08/15/2023
ATI Holdings (USD) TLB L+350 05/10/2023
Ventia Pty Ltd (USD) TLB L+350 05/21/2026
Prometric Inc. (USD) TL L+300 01/19/2025
Tempo Acquisition LLC/FI (USD) TLB L+300 05/01/2024

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 04/21/2020
  • 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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