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North American Bond Research – April 24, 2020

Posted on April 24, 2020
HIGH YIELD BOND RESEARCH
April 24, 2020
Bond Markets

OIL PRICES WENT UP TO 17.09, AND PRESIDENT TRUMP SIGNED ANOTHER ROUND OF AID, DRIVING MARKETS UP. 10 Year Treasury notes were down .6 basis points. S&P +1.39%, Dow +1.11%, NASDAQ +1.65%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 2.8 MILLION+ CASES AND 197000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 910000+ 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
+   Ford Motor Co. 8.5% 4/21/2023 +0.3%
  Ford Motor Co. 9.625% 4/22/2030 +0.6%
  Intl Lease Finance Corp. 8.25% 12/15/2020 +1.1%
  Oceaneering Intl. Inc. 4.65% 11/15/2024 +1.6%
  Occidental Petroleum Corp. 2.7% 8/15/2022 +3.7%
–   Gap Inc. 5.95% 4/12/2021 -0.1%
  Howmet Aerospace Inc. 6.875% 5/1/2025 -0.6%
  Ford Motor Co. 9% 4/22/2025 -1.5%
  Petrobras Global Finance BV 6.85% 6/5/2115 -3.5%
  Teva Pharmaceuticals Fin BV 6.75% 3/1/2028 -3.6%
Gap Inc.   5.95% 4/12/2021
Ford Motor Co.   8.5% 4/21/2023
Howmet Aerospace Inc.   6.875% 5/1/2025
Ford Motor Co.   9% 4/22/2025
Ford Motor Co.   9.625% 4/22/2030
Intl Lease Finance Corp.   8.25% 12/15/2020
Petrobras Global Finance BV   6.85% 6/5/2115
Teva Pharmaceuticals Fin BV   6.75% 3/1/2028
Hertz Corp.   6.25% 10/15/2022
United Rentals Inc.   4.875% 1/15/2028
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.07% -0.32% 16.90% -6.80% -5.68% 5.16%
Mining 1.05% -4.37% 16.76% -32.34% -32.28% -23.42%
Construction -0.20% -0.64% 4.56% -8.26% -7.01% 2.16%
Manufacturing -0.16% -1.23% 13.13% -7.89% -6.87% 0.79%
Transportion, Communication, Electric/Gas 0.05% -0.29% 15.58% -5.50% -4.51% 2.93%
Wholesale -0.02% 0.23% 11.35% -10.34% -9.07% -2.09%
Retail -0.17% -1.19% 9.38% -10.94% -10.11% -1.17%
Finance, Insurance, Real-Estate -0.07% -0.47% 9.68% -8.84% -7.85% 0.05%
Services -0.28% -0.58% 13.36% -7.35% -6.50% 1.94%
Public Administration 0.98% 1.91% 13.30% -6.12% -5.37% 3.15%
Energy 1.19% -3.47% 19.94% -30.67% -30.41% -22.91%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Expedia Group Inc. (USD) 7% 5/1/2025 Reg S (04/23/2020): 750MM Senior Unsecured Notes, Price at Issuance 100, Yielding 7%.

2. MGM Resorts International (USD) 6.75% 5/1/2025 (04/23/2020): 750MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.75%.

3. XPO Logistics Inc. (USD) 6.25% 5/1/2025 144A (04/23/2020): 850MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.25%.

4. Entegris Inc. (USD) 4.375% 4/15/2028 Reg S (04/23/2020): 400MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.38%.

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

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%.

8. Expedia Group Inc. (USD) 6.25% 5/1/2025 Reg S (04/23/2020): 2000MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.25%.

9. XPO Logistics Inc. (USD) 6.25% 5/1/2025 Reg S (04/23/2020): 850MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.25%.

10. Gap Inc. (USD) 8.875% 5/15/2027 Reg S (04/23/2020): 1000MM Secured Notes, Price at Issuance 100, Yielding 8.88%.

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 1470MM in Notes.
Top Widening Loans Top Narrowing Loans
HSE24 Multichannel GmbH (EUR) TLB3 E+375 09/30/2021
Ascent Resources Marcellus LLC (USD) TL EXT L+650 12/31/2049
Epic Y-Grade (USD) TLB L+600 06/13/2024
NSO Group (EUR) TLB E+700 03/03/2025
Multi-Color Corp. (EUR) TLB E+500 07/02/2026
Orion EngineeRed Carbons Hldgs GmbH (USD) TLB L+200 07/25/2024
Concordia International (EUR) TL E+525 09/06/2024
Boluda Towage SL (EUR) TLB1 E+350 08/01/2026
Altra Industrial Motion Inc. (USD) TL L+200 10/01/2025
TI Automotive LTD (USD) TLB L+275 06/30/2022

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  89 bp (basis points), as of 04/24/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
April 24, 2020
Bond Markets

OIL PRICES WENT UP TO 17.09, AND PRESIDENT TRUMP SIGNED ANOTHER ROUND OF AID, DRIVING MARKETS UP. 10 Year Treasury notes were down .6 basis points. S&P +1.39%, Dow +1.11%, NASDAQ +1.65%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 2.8 MILLION+ CASES AND 197000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 876000+ CASES AND 52000+ 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
+   Exxon Mobil Corp. 2.61% 10/15/2030 +0.2%
  Gap Inc. 5.95% 4/12/2021 +0.1%
  Ford Motor Co. 8.5% 4/21/2023 +0.3%
  Ascension Health 2.532% 11/15/2029 +0.2%
  Cigna Corp. 4.125% 11/15/2025 +0.1%
–   General Electric Co. 4.35% 5/1/2050 -1.7%
  Simon Property Group Inc. 3.375% 6/15/2027 -1.4%
  Howmet Aerospace Inc. 6.875% 5/1/2025 -0.6%
  Costco Wholesale Corp. 1.6% 4/20/2030 -0.3%
  Mastercard Inc. 3.35% 3/26/2030 -0.0%
Exxon Mobil Corp.   2.61% 10/15/2030
Gap Inc.   5.95% 4/12/2021
Ford Motor Co.   8.5% 4/21/2023
General Electric Co.   4.35% 5/1/2050
Ascension Health   2.532% 11/15/2029
Simon Property Group Inc.   3.375% 6/15/2027
Howmet Aerospace Inc.   6.875% 5/1/2025
Costco Wholesale Corp.   1.6% 4/20/2030
Mastercard Inc.   3.35% 3/26/2030
Cigna Corp.   4.125% 11/15/2025
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.21% 0.20% 5.30% -0.58% 0.39% 5.29%
Mining 0.21% -0.50% 11.68% -6.86% -5.76% 2.68%
Construction 0.03% -0.07% 7.80% -3.70% -2.32% 4.88%
Manufacturing 0.07% -0.09% 10.42% 0.82% 2.21% 10.65%
Transportion, Communication, Electric/Gas 0.16% 0.18% 14.05% 1.13% 3.00% 12.80%
Wholesale 0.00% -0.22% 6.92% -1.89% -0.59% 8.19%
Retail 0.09% -0.14% 10.65% 1.62% 2.86% 12.53%
Finance, Insurance, Real-Estate 0.04% -0.04% 7.16% -0.08% 0.94% 7.83%
Services 0.02% -0.06% 9.10% 0.38% 1.65% 9.84%
Public Administration -0.02% 0.07% 0.35% 3.11% 3.58% 6.33%
Energy 0.16% -0.69% 13.44% -7.09% -6.07% 2.22%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Marathon Petroleum Corp. (USD) 4.7% 5/1/2025 (04/23/2020): 1250MM Senior Unsecured Notes, Price at Issuance 99.805, Yielding 4.74%.

2. Expedia Group Inc. (USD) 7% 5/1/2025 Reg S (04/23/2020): 750MM Senior Unsecured Notes, Price at Issuance 100, Yielding 7%.

3. Nasdaq Inc. (USD) 3.25% 4/28/2050 (04/23/2020): 500MM Senior Unsecured Notes, Price at Issuance 98.098, Yielding 3.35%.

4. Morgan Stanley (USD) 2.188% 4/28/2026 (04/23/2020): 3000MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.19%.

5. First Horizon Bank (USD) 5.75% 5/1/2030 (04/23/2020): 450MM Subordinated Notes, Price at Issuance 100, Yielding 5.75%.

6. Marathon Petroleum Corp. (USD) 4.5% 5/1/2023 (04/23/2020): 1250MM Senior Unsecured Notes, Price at Issuance 99.941, Yielding 4.52%.

7. Wells Fargo & Co. (USD) 3.068% 4/30/2041 (04/23/2020): 3500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.07%.

8. Wells Fargo & Co. (USD) VAR% 4/30/2026 (04/23/2020): 3000MM Senior Unsecured Notes, Price at Issuance 100.

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

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

Additional Commentary

NEW ISSUANCE WATCH: on 04/24/2020 participants welcome a $1250MM new corporate-bond offering by Marathon Petroleum Corp.
Top Widening Loans Top Narrowing Loans
HSE24 Multichannel GmbH (EUR) TLB3 E+375 09/30/2021
Ascent Resources Marcellus LLC (USD) TL EXT L+650 12/31/2049
Epic Y-Grade (USD) TLB L+600 06/13/2024
NSO Group (EUR) TLB E+700 03/03/2025
Multi-Color Corp. (EUR) TLB E+500 07/02/2026
Orion EngineeRed Carbons Hldgs GmbH (USD) TLB L+200 07/25/2024
Concordia International (EUR) TL E+525 09/06/2024
Boluda Towage SL (EUR) TLB1 E+350 08/01/2026
Altra Industrial Motion Inc. (USD) TL L+200 10/01/2025
TI Automotive LTD (USD) TLB L+275 06/30/2022

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 89 bp (basis points), as of 04/24/2020
  • 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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