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North American Bond Research – April 22, 2020

Posted on April 22, 2020
HIGH YIELD BOND RESEARCH
April 22, 2020
Bond Markets

OIL PRICES REBOUNDED SENDING MARKETS UP. OIL FINISHED UP AT 14.23 A BARREL. CORONAVIRUS CASES AND DEATHS ARE ALSO SLOWING DOWN AND MORE COUNTRIES ARE STARTING TO SLOWLY OPEN UP. 10 Year Treasury notes were down 5.5 basis points. S&P +2.29%, Dow +1.99%, NASDAQ +2.81%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 2.6 MILLION+ CASES AND 183000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 845000+ CASES AND 48000+ 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
+   Ford Motor Co. 9% 4/22/2025 +1.3%
  Ford Motor Co. 9.625% 4/22/2030 +0.8%
  Petrobras Global Finance BV 6.85% 6/5/2115 +0.4%
  AerCap Ireland Capital LTD 4.625% 10/30/2020 +3.8%
  Steel Dynamics 5.5% 10/1/2024 +0.9%
–   Ford Motor Co. 8.5% 4/21/2023 -1.0%
  EPR Properties 5.25% 7/15/2023 -3.4%
  Expedia Inc. 4.5% 8/15/2024 -3.8%
  Petrobras Global Finance BV 8.75% 5/23/2026 -0.7%
  Oceaneering Intl. Inc. 4.65% 11/15/2024 -5.4%
Ford Motor Co.   9% 4/22/2025
Ford Motor Co.   8.5% 4/21/2023
Ford Motor Co.   9.625% 4/22/2030
EPR Properties   5.25% 7/15/2023
Expedia Inc.   4.5% 8/15/2024
Petrobras Global Finance BV   6.85% 6/5/2115
Petrobras Global Finance BV   8.75% 5/23/2026
Oceaneering Intl. Inc.   4.65% 11/15/2024
AerCap Ireland Capital LTD   4.625% 10/30/2020
Intl Lease Finance Corp.   5.875% 8/15/2022
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.02% 1.16% 16.46% -6.65% -5.52% 5.13%
Mining -3.39% -7.68% 10.22% -35.01% -34.61% -24.44%
Construction -0.38% 0.33% 4.08% -7.32% -6.35% 2.34%
Manufacturing -0.91% -0.60% 11.83% -7.67% -6.52% 0.92%
Transportion, Communication, Electric/Gas -0.81% 0.13% 14.21% -5.56% -4.55% 2.79%
Wholesale -0.51% 1.06% 11.23% -11.14% -9.84% -3.04%
Retail -1.00% -1.74% 6.70% -11.26% -10.40% -0.78%
Finance, Insurance, Real-Estate -0.60% 0.20% 8.31% -8.62% -7.64% 0.04%
Services -0.87% 0.28% 11.66% -6.82% -5.85% 2.36%
Public Administration 3.15% 2.81% 10.96% -6.25% -5.90% 2.71%
Energy -3.21% -6.26% 14.32% -32.95% -32.39% -23.61%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Sally Holdings LLC (USD) 8.75% 4/30/2025 144A (04/21/2020): 300MM Second Lien Notes, Price at Issuance 100, Yielding 8.75%.

2. Sally Holdings LLC (USD) 8.75% 4/30/2025 Reg S (04/21/2020): 300MM Second Lien Notes, Price at Issuance 100, Yielding 8.75%.

3. Performance Food Group Inc. (USD) 6.875% 5/1/2025 144A (04/21/2020): 275MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.88%.

4. Kaiser Aluminum & Chemical Corp. (USD) 6.5% 5/1/2025 144A (04/21/2020): 300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.5%.

5. SeaWorld Parks & Entertainment Inc. (USD) 8.75% 5/1/2025 144A (04/21/2020): 227MM First Lien Notes, Price at Issuance 100, Yielding 8.75%.

6. Navistar International Corp. (USD) 9.5% 5/1/2025 144A (04/21/2020): 600MM First Lien Notes, Price at Issuance 100, Yielding 9.5%.

7. Performance Food Group Inc. (USD) 6.875% 5/1/2025 Reg S (04/21/2020): 275MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.88%.

8. Kaiser Aluminum & Chemical Corp. (USD) 6.5% 5/1/2025 Reg S (04/21/2020): 300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.5%.

9. Builders FirstSource Inc. (USD) 6.75% 6/1/2027 (04/21/2020): 350MM Secured Notes, Price at Issuance 98.75, Yielding 6.97%.

10. SeaWorld Parks & Entertainment Inc. (USD) 8.75% 5/1/2025 Reg S (04/21/2020): 227MM First Lien Notes, Price at Issuance 100, Yielding 8.75%.

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: Sally Holdings issued 600MM in Notes.
Top Widening Loans Top Narrowing Loans
New LightSquared LLC (USD) TL PIK L+875 12/07/2020
J Crew Group Inc. (USD) TLB L+322 03/06/2021
Ascent Resources Marcellus LLC (USD) TL EXT L+650 12/31/2049
ZPG PLC (GBP) TL L+750 07/12/2026
NSO Group (EUR) TLB E+700 03/03/2025
Nets Hldgs AS (EUR) TL E+700 02/06/2027
Boluda Towage SL (EUR) TLB1 E+350 08/01/2026
Concordia International (EUR) TL E+525 09/06/2024
Webhelp SA (EUR) TLB E+350 08/08/2026
Globalfoundries Inc. (USD) TLB L+400 06/05/2026

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  95 bp (basis points), as of 04/22/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
April 22, 2020
Bond Markets

OIL PRICES REBOUNDED SENDING MARKETS UP. OIL FINISHED UP AT 14.23 A BARREL. CORONAVIRUS CASES AND DEATHS ARE ALSO SLOWING DOWN AND MORE COUNTRIES ARE STARTING TO SLOWLY OPEN UP. 10 Year Treasury notes were down 5.5 basis points. S&P +2.29%, Dow +1.99%, NASDAQ +2.81%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 2.6 MILLION+ CASES AND 183000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 845000+ CASES AND 48000+ 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
+   Ford Motor Co. 9% 4/22/2025 +1.3%
  PepsiCo. Inc. 3.875% 3/19/2060 +1.2%
  General Electric Co. 4.35% 5/1/2050 +0.8%
  Exxon Mobil Corp. 3.452% 4/15/2051 +1.5%
  Oracle Corp. 3.6% 4/1/2050 +1.7%
–   Ford Motor Co. 8.5% 4/21/2023 -1.0%
  Citigroup Inc. 4.412% 3/31/2031 -0.1%
  Oracle Corp. 2.5% 4/1/2025 -0.1%
  JPMorgan Chase & Co. 2.522% 4/22/2031 -0.3%
  Nvidia Corp. 3.5% 4/1/2050 -0.2%
Ford Motor Co.   9% 4/22/2025
Ford Motor Co.   8.5% 4/21/2023
PepsiCo. Inc.   3.875% 3/19/2060
Citigroup Inc.   4.412% 3/31/2031
General Electric Co.   4.35% 5/1/2050
Exxon Mobil Corp.   3.452% 4/15/2051
Oracle Corp.   2.5% 4/1/2025
JPMorgan Chase & Co.   2.522% 4/22/2031
Oracle Corp.   3.6% 4/1/2050
AT&T Inc.   4.5% 3/9/2048
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.26% 0.74% 5.05% -0.59% 0.28% 5.08%
Mining -0.52% 0.16% 10.88% -7.20% -6.38% 2.17%
Construction -0.00% 1.41% 5.21% -2.59% -1.65% 5.73%
Manufacturing -0.04% 0.60% 10.97% 1.46% 2.48% 10.74%
Transportion, Communication, Electric/Gas 0.04% 1.44% 14.87% 1.68% 3.01% 12.76%
Wholesale -0.16% 0.90% 6.69% -1.24% -0.30% 8.48%
Retail -0.02% 0.75% 10.74% 2.26% 3.05% 12.54%
Finance, Insurance, Real-Estate -0.08% 0.33% 7.61% 0.20% 0.95% 7.94%
Services 0.02% 0.78% 10.34% 1.11% 2.07% 10.64%
Public Administration 0.02% 0.26% 0.63% 3.25% 3.59% 6.35%
Energy -0.53% 0.49% 13.20% -7.05% -6.31% 1.84%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Kroger Co. (USD) 2.2% 5/1/2030 (04/21/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.786, Yielding 2.22%.

2. Micron Technology Inc. (USD) 2.497% 4/24/2023 (04/21/2020): 1250MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.5%.

3. Hyatt Hotels Corp. (USD) 5.375% 4/23/2025 (04/21/2020): 450MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.38%.

4. Hyatt Hotels Corp. (USD) 5.75% 4/23/2030 (04/21/2020): 450MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.75%.

5. VF Corp. (USD) 2.8% 4/23/2027 (04/21/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.836, Yielding 2.83%.

6. VF Corp. (USD) 2.05% 4/23/2022 (04/21/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.982, Yielding 2.06%.

7. VF Corp. (USD) 2.95% 4/23/2030 (04/21/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.785, Yielding 2.97%.

8. VF Corp. (USD) 2.4% 4/23/2025 (04/21/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.827, Yielding 2.44%.

9. Equifax Inc. (USD) 2.6% 12/15/2025 (04/22/2020): 400MM Senior Unsecured Notes, Price at Issuance 99.888, Yielding 2.62%.

10. Nova Scotia Power Inc. (CAD) 3.307% 4/25/2050 (04/22/2020): 300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.31%.

Additional Commentary

NEW ISSUANCE WATCH: on 04/22/2020 participants welcome a $500MM new corporate-bond offering by Kroger Co.
Top Widening Loans Top Narrowing Loans
New LightSquared LLC (USD) TL PIK L+875 12/07/2020
J Crew Group Inc. (USD) TLB L+322 03/06/2021
Ascent Resources Marcellus LLC (USD) TL EXT L+650 12/31/2049
ZPG PLC (GBP) TL L+750 07/12/2026
NSO Group (EUR) TLB E+700 03/03/2025
Nets Hldgs AS (EUR) TL E+700 02/06/2027
Boluda Towage SL (EUR) TLB1 E+350 08/01/2026
Concordia International (EUR) TL E+525 09/06/2024
Webhelp SA (EUR) TLB E+350 08/08/2026
Globalfoundries Inc. (USD) TLB L+400 06/05/2026

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 95 bp (basis points), as of 04/22/2020
  • 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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