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North American Bond Research – April 23, 2020

Posted on April 23, 2020
HIGH YIELD BOND RESEARCH
April 23, 2020
Bond Markets

OIL PRICES WENT UP TO 17.04 AND FOR MOST OF THE DAY MARKETS WERE UP, BUT IN THE END, ANOTHER 4.4 MM AMERICANS LOST THEIR JOBS. MARKETS ENDED MIXED TO LOWER.  10 Year Treasury notes were down .6 basis points. S&P -0.05%, Dow +0.17%, NASDAQ -0.01%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 2.7 MILLION+ CASES AND 183000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 876000+ CASES AND 50000+ DEATHS.  Among high-grade bonds showing topmost price gains at appreciable volumes traded, Ferrellgas Partners LP (USD) 8.625% 6/15/2020 made analysts’ ‘Conviction Buy’ list. (See the chart below for Ferrellgas Partners LP bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Gap Inc. 5.95% 4/12/2021 +6.6%
  Ford Motor Co. 9% 4/22/2025 +1.3%
  Ford Motor Co. 8.5% 4/21/2023 +1.7%
  EPR Properties 5.25% 7/15/2023 +0.9%
  Aircastle LTD 5.125% 3/15/2021 +1.0%
–   Netflix Inc. 5.375% 2/1/2021 -0.1%
  Western Digital Corp. 4.75% 2/15/2026 -2.3%
  Sprint Capital Corp. 6.875% 11/15/2028 -1.5%
  Alcoa Inc. 5.125% 10/1/2024 -5.2%
  Chesapeake Energy Corp. 5.75% 3/15/2023 -29.1%
Gap Inc.   5.95% 4/12/2021
Ford Motor Co.   9% 4/22/2025
Ford Motor Co.   8.5% 4/21/2023
EPR Properties   5.25% 7/15/2023
Aircastle LTD   5.125% 3/15/2021
Netflix Inc.   5.375% 2/1/2021
Occidental Petroleum Corp.   2.9% 8/15/2024
EQT Corp.   7% 2/1/2030
Whiting Petroleum Corp.   6.625% 1/15/2026
EQT Corp.   3.9% 10/1/2027
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.19% -0.30% 16.26% -6.73% -5.61% 5.13%
Mining 0.19% -6.14% 10.97% -34.10% -33.70% -25.02%
Construction -0.04% 0.02% 3.61% -8.05% -6.89% 2.34%
Manufacturing -0.24% -0.89% 11.45% -7.84% -6.64% 0.84%
Transportion, Communication, Electric/Gas -0.14% -0.14% 14.27% -5.42% -4.37% 3.15%
Wholesale 0.22% 0.66% 10.11% -9.71% -8.38% -1.63%
Retail -0.54% -1.96% 5.75% -12.59% -11.68% -2.91%
Finance, Insurance, Real-Estate -0.09% -0.06% 8.20% -8.37% -7.33% 0.91%
Services -0.18% -0.06% 11.38% -7.16% -6.22% 2.25%
Public Administration -1.04% 0.84% 9.77% -8.06% -6.89% 1.82%
Energy 0.15% -5.20% 14.80% -32.30% -31.77% -23.88%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. GFL Environmental Inc. (USD) 4.25% 6/1/2025 144A (04/22/2020): 500MM Secured Notes, Price at Issuance 100, Yielding 4.25%.

2. Howmet Aerospace Inc. (USD) 6.875% 5/1/2025 (04/22/2020): 1200MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.88%.

3. GFL Environmental Inc. (USD) 4.25% 6/1/2025 Reg S (04/22/2020): 500MM Secured Notes, Price at Issuance 100, Yielding 4.25%.

4. Aramark Svcs Inc. (USD) 6.375% 5/1/2025 144A (04/22/2020): 1500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.38%.

5. Aramark Svcs Inc. (USD) 6.375% 5/1/2025 Reg S (04/22/2020): 1500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.38%.

6. Netflix Inc. (USD) 3.625% 6/15/2025 144A (04/23/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.63%.

7. Netflix Inc. (EUR) 3% 6/15/2025 Reg S (04/23/2020): 470MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3%.

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: Netflix Inc. issued 970MM in Notes.
Top Widening Loans Top Narrowing Loans
Ascent Resources Marcellus LLC (USD) TL EXT L+650 12/31/2049
NSO Group (EUR) TLB E+700 03/03/2025
Paysafe Group PLC (USD) TL L+350 01/02/2025
LA Fitness PLC (USD) TLA L+275 04/13/2025
Arvos Holding (EUR) TLB2 E+450 08/29/2021
Orion EngineeRed Carbons Hldgs GmbH (USD) TLB L+200 07/25/2024
General Motors Co. (USD) RC L+112.5 04/13/2021
Ineos Finance PLC (EUR) TLB E+200 03/31/2024
BCA Marketplace PLC (EUR) TLB2 E+325 09/24/2026
Concordia International (EUR) TL E+525 09/06/2024

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  92 bp (basis points), as of 04/23/2020
  • Net negative capital flows into high-yield ETFs & mutual funds
INVESTMENT GRADE BOND RESEARCH
April 23, 2020
Bond Markets

OIL PRICES WENT UP TO 17.04 AND FOR MOST OF THE DAY MARKETS WERE UP, BUT IN THE END, ANOTHER 4.4 MM AMERICANS LOST THEIR JOBS. MARKETS ENDED MIXED TO LOWER.  10 Year Treasury notes were down .6 basis points. S&P -0.05%, Dow +0.17%, NASDAQ -0.01%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 2.7 MILLION+ CASES AND 183000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 876000+ CASES AND 50000+ DEATHS.  Among high-grade bonds showing topmost price gains at appreciable volumes traded, United Parcel Service Inc. (USD) 4.875% 11/15/2040 made analysts’ ‘Conviction Buy’ list. (See the chart below for United Parcel Service Inc.  bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Anheuser-Busch Inbev Worldwide Inc. 4.5% 6/1/2050 +2.0%
  Gap Inc. 5.95% 4/12/2021 +6.6%
  Ford Motor Co. 9% 4/22/2025 +1.3%
  Costco Wholesale Corp. 1.375% 6/20/2027 +0.6%
  Oracle Corp. 3.6% 4/1/2040 +1.1%
–   Ascension Health 2.532% 11/15/2029 -0.5%
  Hyatt Hotels Corp. 5.375% 4/23/2025 -0.5%
  Canadian Imperial Bank of Commerce FLT% 3/17/2023 -0.6%
  Exxon Mobil Corp. 1.571% 4/15/2023 -0.0%
  Marriott Intl Inc. 2.875% 3/1/2021 -1.1%
Anheuser-Busch Inbev Worldwide Inc.   4.5% 6/1/2050
Gap Inc.   5.95% 4/12/2021
Ford Motor Co.   9% 4/22/2025
Costco Wholesale Corp.   1.375% 6/20/2027
Oracle Corp.   3.6% 4/1/2040
Wells Fargo & Co.   VAR% 4/4/2031
Ford Motor Co.   8.5% 4/21/2023
Bank of America Corp.   2.496% 2/13/2031
JPMorgan Chase & Co.   5% PERP (1)
Coca-Cola Co.   4.2% 3/25/2050
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.03% 1.01% 5.55% -0.76% 0.26% 5.14%
Mining -0.23% -0.69% 10.87% -7.57% -6.53% 2.34%
Construction -0.16% 0.85% 5.19% -1.92% -0.65% 6.67%
Manufacturing -0.11% 0.11% 10.92% 0.98% 2.26% 10.69%
Transportion, Communication, Electric/Gas -0.16% 0.59% 14.73% 1.12% 2.78% 12.67%
Wholesale -0.18% 0.11% 7.07% -1.79% -0.57% 8.56%
Retail -0.12% 0.08% 10.92% 1.71% 2.71% 12.33%
Finance, Insurance, Real-Estate -0.05% 0.03% 7.61% -0.00% 0.94% 8.12%
Services -0.16% 0.15% 9.91% 0.54% 1.69% 10.13%
Public Administration 0.00% 0.14% 0.63% 3.18% 3.59% 6.35%
Energy -0.28% -0.42% 12.80% -7.45% -6.51% 1.88%
 
Total returns (non-annualized) by rating, market weighted.

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

2. Bank of Montreal (USD) 1.85% 5/1/2025 (04/22/2020): 1500MM Senior Unsecured Notes, Price at Issuance 99.924, Yielding 1.87%.

3. Bank of America Corp. (USD) VAR% 4/29/2031 (04/22/2020): 3000MM Senior Unsecured Notes, Price at Issuance 100.

4. Howmet Aerospace Inc. (USD) 6.875% 5/1/2025 (04/22/2020): 1200MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.88%.

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

6. Citigroup Inc. (USD) 0% 4/29/2060 (04/22/2020): 50MM Senior Unsecured Notes, Price at Issuance 100, Yielding 0%.

7. Travelers COS Inc. (USD) 2.55% 4/27/2050 (04/23/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.231, Yielding 2.59%.

8. Constellation Brands Inc. (USD) 2.875% 5/1/2030 (04/23/2020): 99MM Senior Unsecured Notes, Price at Issuance 99.801, Yielding 2.9%.

9. Constellation Brands Inc. (USD) 3.75% 5/1/2050 (04/23/2020): 99MM Senior Unsecured Notes, Price at Issuance 99.286, Yielding 3.79%.

Additional Commentary

NEW ISSUANCE WATCH: on 04/23/2020 participants welcome a $400MM new corporate-bond offering by Equifax Inc.
Top Widening Loans Top Narrowing Loans
Ascent Resources Marcellus LLC (USD) TL EXT L+650 12/31/2049
NSO Group (EUR) TLB E+700 03/03/2025
Paysafe Group PLC (USD) TL L+350 01/02/2025
LA Fitness PLC (USD) TLA L+275 04/13/2025
Arvos Holding (EUR) TLB2 E+450 08/29/2021
Orion EngineeRed Carbons Hldgs GmbH (USD) TLB L+200 07/25/2024
General Motors Co. (USD) RC L+112.5 04/13/2021
Ineos Finance PLC (EUR) TLB E+200 03/31/2024
BCA Marketplace PLC (EUR) TLB2 E+325 09/24/2026
Concordia International (EUR) TL E+525 09/06/2024

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 92 bp (basis points), as of 04/23/2020
  • 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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