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North American Bond Research – April 27, 2020

Posted on April 27, 2020
HIGH YIELD BOND RESEARCH
April 27, 2020
Bond Markets

INVESTORS EYE REOPENING PLANS AND SEE GOVERNMENT LIQUIDITY FLOWING INTO THE MARKETS CAUSING MARKETS TO GO UP. OIL CRASHES TO 12.51(WTI)/19.20(BRENT).  10 Year Treasury notes were down .6 basis points. S&P +1.47%, Dow +1.51%, NASDAQ +1.11%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 3 MILLION+ CASES AND 197000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 1 MILLION+ CASES AND 57000+ 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 +0.2%
  Ford Motor Co. 9.625% 4/22/2030 +0.4%
  Howmet Aerospace Inc. 6.875% 5/1/2025 +0.2%
  AerCap Ireland Capital LTD 4.625% 10/30/2020 +0.1%
  Expedia Inc. 5.95% 8/15/2020 +0.7%
–   Ford Motor Co. 9% 4/22/2025 -0.0%
  Gap Inc. 5.95% 4/12/2021 -0.4%
  Occidental Petroleum Corp. 2.7% 8/15/2022 -1.9%
  Petrobras Global Finance BV 6.85% 6/5/2115 -3.0%
  Sabine Pass Liquefaction LLC 5.625% 3/1/2025 -0.2%
Ford Motor Co.   9% 4/22/2025
Ford Motor Co.   8.5% 4/21/2023
Gap Inc.   5.95% 4/12/2021
Occidental Petroleum Corp.   2.7% 8/15/2022
Petrobras Global Finance BV   6.85% 6/5/2115
Sabine Pass Liquefaction LLC   5.625% 3/1/2025
Ford Motor Co.   9.625% 4/22/2030
Diamond Offshore Drilling Inc.   4.875% 11/1/2043
Boyd Gaming Corp.   6.375% 4/1/2026
HCA Inc.   5.875% 2/1/2029
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.16% -0.01% 16.22% -6.13% -5.09% 5.61%
Mining 0.45% -3.76% 18.34% -31.79% -32.01% -23.47%
Construction -0.04% -0.76% 5.75% -8.26% -6.97% 2.15%
Manufacturing -0.23% -1.65% 12.55% -7.73% -6.78% 0.88%
Transportion, Communication, Electric/Gas -0.08% -0.78% 14.51% -5.86% -4.90% 2.34%
Wholesale -0.05% -0.48% 10.59% -10.41% -9.16% -2.29%
Retail -0.08% -1.84% 9.15% -11.11% -10.37% -1.69%
Finance, Insurance, Real-Estate -0.14% -0.92% 9.86% -8.51% -7.55% 0.35%
Services -0.29% -1.53% 12.92% -7.99% -7.24% 1.11%
Public Administration -1.25% 2.49% 12.69% -7.41% -6.66% 1.73%
Energy 0.53% -3.17% 21.78% -30.02% -30.04% -22.84%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 04/27/2020)
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: No new issues.
Top Widening Loans Top Narrowing Loans
NCL Corp. LTD (USD) TLA L+150 01/02/2024
Exclusive Group (EUR) TLB E+400 06/06/2025
Coty Inc. (EUR) TLA E+175 04/05/2023
Clear Channel Outdoor Inc. (USD) TLB L+350 08/09/2026
ProAmpac LLC (USD) TL L+350 11/18/2023
Verscend Holding Corp. (USD) TLB L+450 08/27/2025
Ineos Finance PLC (USD) TL L+200 03/31/2024
USIC Holdings Inc. (USD) TL L+325 12/09/2023
Ultimate Software Group (USD) TL L+375 05/03/2026
BJ’s Wholesale Club Inc. (USD) TL L+225 02/03/2024

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

 

INVESTMENT GRADE BOND RESEARCH
April 27, 2020
Bond Markets

INVESTORS EYE REOPENING PLANS AND SEE GOVERNMENT LIQUIDITY FLOWING INTO THE MARKETS CAUSING MARKETS TO GO UP. OIL CRASHES TO 12.51(WTI)/19.20(BRENT).  10 Year Treasury notes were down .6 basis points. S&P +1.47%, Dow +1.51%, NASDAQ +1.11%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 3 MILLION+ CASES AND 197000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 1 MILLION+ CASES AND 57000+ 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
+   Ford Motor Co. 8.5% 4/21/2023 +0.2%
  Marriott Intl Inc. 5.75% 5/1/2025 +0.2%
  Goldman Sachs Group Inc. 3.5% 4/1/2025 +0.2%
  Exxon Mobil Corp. 1.571% 4/15/2023 +0.1%
  Citigroup Inc. 3.106% 4/8/2026 +0.1%
–   Oracle Corp. 3.6% 4/1/2050 -0.1%
  Comcast Corp. 3.4% 4/1/2030 -1.1%
  Ford Motor Co. 9% 4/22/2025 -0.0%
  Citigroup Inc. 4.412% 3/31/2031 -0.7%
  Embraer Netherlands B.V. 5.4% 2/1/2027 -6.8%
Wells Fargo & Co.   VAR% 4/30/2026
Oracle Corp.   3.6% 4/1/2050
Comcast Corp.   3.4% 4/1/2030
Ford Motor Co.   8.5% 4/21/2023
Ford Motor Co.   9% 4/22/2025
Marriott Intl Inc.   5.75% 5/1/2025
Citigroup Inc.   4.412% 3/31/2031
Embraer Netherlands B.V.   5.4% 2/1/2027
Morgan Stanley   VAR% 4/1/2031
Goldman Sachs Group Inc.   3.5% 4/1/2025
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.10% 0.39% 6.48% -0.83% 0.18% 5.25%
Mining 0.28% -0.26% 12.38% -7.27% -5.99% 2.49%
Construction 0.28% 0.52% 8.40% -2.44% -0.84% 5.86%
Manufacturing 0.05% -0.01% 9.71% 0.71% 2.31% 10.42%
Transportion, Communication, Electric/Gas 0.13% 0.30% 13.62% 1.04% 3.09% 12.45%
Wholesale 0.09% -0.17% 7.30% -2.15% -0.71% 7.86%
Retail 0.10% 0.02% 9.98% 1.57% 3.01% 12.27%
Finance, Insurance, Real-Estate 0.06% 0.05% 7.12% -0.14% 1.03% 7.76%
Services 0.06% 0.03% 8.69% 0.34% 1.83% 9.92%
Public Administration 0.02% 0.09% 0.42% 3.07% 3.61% 6.27%
Energy 0.22% -0.51% 14.20% -7.18% -6.08% 1.93%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Biogen Inc. (USD) 2.25% 5/1/2030 (04/27/2020): 1500MM Senior Unsecured Notes, Price at Issuance 99.973, Yielding 2.25%.

2. Delta Airlines (USD) 7% 5/1/2025 144A (04/27/2020): 3500MM First Lien Notes, Price at Issuance 100, Yielding 7%.

3. Delta Airlines (USD) 7% 5/1/2025 Reg S (04/27/2020): 3500MM First Lien Notes, Price at Issuance 100, Yielding 7%.

4. Air Products & Chemicals Inc. (USD) 2.8% 5/15/2050 (04/27/2020): 950MM Senior Unsecured Notes, Price at Issuance 99.636, Yielding 2.82%.

5. Sector RE V LTD (USD) 0% 3/1/2025 (04/27/2020): 91MM Unsecured Notes, Price at Issuance 100, Yielding 0%.

6. Air Products & Chemicals Inc. (USD) 2.7% 5/15/2040 (04/27/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.722, Yielding 2.72%.

7. Charles Schwab Corp. (USD) 5.375% PERP (04/27/2020): 2500MM Junior Subordinated Notes, Price at Issuance 100, Yielding 5.38%.

8. Air Products & Chemicals Inc. (USD) 2.05% 5/15/2030 (04/27/2020): 900MM Senior Unsecured Notes, Price at Issuance 99.864, Yielding 2.07%.

9. Air Products & Chemicals Inc. (USD) 1.5% 10/15/2025 (04/27/2020): 550MM Senior Unsecured Notes, Price at Issuance 99.979, Yielding 1.5%.

10. Air Products & Chemicals Inc. (USD) 1.85% 5/15/2027 (04/27/2020): 650MM Senior Unsecured Notes, Price at Issuance 99.901, Yielding 1.86%.

Additional Commentary

NEW ISSUANCE WATCH: on 04/27/2020 participants welcome a $250MM new corporate-bond offering by Charles Schwab Corp.
Top Widening Loans Top Narrowing Loans
NCL Corp. LTD (USD) TLA L+150 01/02/2024
Exclusive Group (EUR) TLB E+400 06/06/2025
Coty Inc. (EUR) TLA E+175 04/05/2023
Clear Channel Outdoor Inc. (USD) TLB L+350 08/09/2026
ProAmpac LLC (USD) TL L+350 11/18/2023
Verscend Holding Corp. (USD) TLB L+450 08/27/2025
Ineos Finance PLC (USD) TL L+200 03/31/2024
USIC Holdings Inc. (USD) TL L+325 12/09/2023
Ultimate Software Group (USD) TL L+375 05/03/2026
BJ’s Wholesale Club Inc. (USD) TL L+225 02/03/2024

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 78 bp (basis points), as of 04/27/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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