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North American Bond Research – April 28, 2020

Posted on April 28, 2020
HIGH YIELD BOND RESEARCH
April 28, 2020
Bond Markets

OIL CLOSED AT 13.09. EARNINGS DISAPPOINTMENT AND POOR APRIL CONSUMER SENTIMENT SENT STOCKS LOWER, ENDING A 4 DAY WINNING STREAK.   10 Year Treasury notes were down 4.6 basis points. S&P -0.52%, Dow -0.13%, NASDAQ -1.4%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 3.12 MILLION+ CASES AND 216000+ 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. 9% 4/22/2025 +0.7%
  Netflix Inc. 5.875% 11/15/2028 +0.6%
  Teva Pharmaceutical Industries LTD 2.2% 7/21/2021 +0.4%
  Occidental Petroleum Corp. 2.7% 2/15/2023 +0.2%
  Occidental Petroleum Corp. 2.9% 8/15/2024 +4.9%
  Occidental Petroleum Corp. 4.2% 3/15/2048 +2.7%
–   Ford Motor Co. 8.5% 4/21/2023 -0.2%
  Enbridge Inc. VAR% 3/1/2089 -0.8%
  NXP BV 3.875% 9/1/2022 Reg S -1.3%
  Expedia Inc. 3.8% 2/15/2028 (1) -0.2%
  General Motors Co. 4.875% 10/2/2023 -2.3%
Ford Motor Co.   8.5% 4/21/2023
Ford Motor Co.   9% 4/22/2025
Enbridge Inc.   VAR% 3/1/2089
Ford Motor Co.   9.625% 4/22/2030
NXP BV   3.875% 9/1/2022 Reg S
Netflix Inc.   5.875% 11/15/2028
Expedia Inc.   3.8% 2/15/2028 (1)
General Motors Co.   4.875% 10/2/2023
Teva Pharmaceutical Industries LTD   2.2% 7/21/2021
Occidental Petroleum Corp.   2.7% 2/15/2023
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.71% -0.78% 9.58% -7.27% -6.25% 4.60%
Mining -0.30% -2.37% 13.34% -30.88% -31.51% -23.30%
Construction -0.05% -0.80% 4.92% -7.59% -6.45% 1.96%
Manufacturing -0.12% -1.58% 6.38% -7.59% -6.88% 0.44%
Transportion, Communication, Electric/Gas -0.13% -1.16% 8.23% -5.08% -4.39% 2.84%
Wholesale -0.03% -0.43% 9.65% -9.64% -8.84% -1.70%
Retail -0.19% -2.41% 3.23% -11.86% -11.44% -2.94%
Finance, Insurance, Real-Estate -0.15% -1.26% 4.91% -8.77% -8.02% -0.34%
Services -0.18% -1.98% 5.97% -7.97% -7.61% 1.03%
Public Administration 0.84% 3.00% 12.95% -7.12% -6.04% 2.53%
Energy -0.23% -1.70% 17.76% -29.53% -29.91% -22.59%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Jeld-Wen Inc. (USD) 6.25% 5/15/2025 144A (04/27/2020): 250MM Secured Notes, Price at Issuance 100, Yielding 6.25%. 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: Jeld-Wen Inc issued 250 MM in notes.
Top Widening Loans Top Narrowing Loans
McDermott International Inc. (USD) DD L+1000 10/21/2021
Red Ventures (USD) TLB L+250 11/08/2024
GrafTech International LTD (USD) TLB L+350 02/12/2025
Ardent Health Partners LLC (USD) TL L+450 06/28/2025
Tibco Software Inc. (USD) TLB3 L+375 07/03/2026
ProFrac Services LLC (USD) TLB L+575 09/06/2023
Sundyne US Purchaser (USD) TLB L+425 03/17/2027
CSM Bakery (USD) TLB L+400 07/03/2020
Hanger Inc (USD) TLB L+350 03/06/2025
Clear Channel Outdoor Inc. (USD) TLB L+350 08/09/2026

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  74 bp (basis points), as of 04/28/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
April 28, 2020
Bond Markets

OIL CLOSED AT 13.09. EARNINGS DISAPPOINTMENT AND POOR APRIL CONSUMER SENTIMENT SENT STOCKS LOWER, ENDING A 4 DAY WINNING STREAK.   10 Year Treasury notes were down 4.6 basis points. S&P -0.52%, Dow -0.13%, NASDAQ -1.4%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 3.12 MILLION+ CASES AND 216000+ 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
+   Wells Fargo & Co. 3.068% 4/30/2041 +0.8%
  Anheuser-Busch Inbev Worldwide Inc. 4.5% 6/1/2050 +1.2%
  Anheuser-Busch Inbev Worldwide Inc. 4.9% 2/1/2046 +1.5%
  Morgan Stanley VAR% 4/1/2031 +1.1%
  Walgreens Boots Alliance Inc. 4.1% 4/15/2050 +0.9%
–   Ford Motor Co. 8.5% 4/21/2023 -0.2%
  Noble Energy Inc. 5.05% 11/15/2044 -1.5%
  Exelon Corp. 4.05% 4/15/2030 -0.1%
  CVS Health Corp. 3.35% 3/9/2021 -0.3%
  Nike Inc. 2.4% 3/27/2025 -0.1%
Wells Fargo & Co.   3.068% 4/30/2041
Anheuser-Busch Inbev Worldwide Inc.   4.5% 6/1/2050
Anheuser-Busch Inbev Worldwide Inc.   4.9% 2/1/2046
Morgan Stanley   VAR% 4/1/2031
Walgreens Boots Alliance Inc.   4.1% 4/15/2050
Citigroup Inc.   4.412% 3/31/2031
Ford Motor Co.   8.5% 4/21/2023
Shell Intl Finance BV   3.25% 4/6/2050
Goldman Sachs Group Inc.   3.5% 4/1/2025
Wells Fargo & Co.   VAR% 4/30/2026
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.04% -0.21% 5.87% -1.09% 0.14% 5.22%
Mining -0.13% -0.15% 8.79% -7.57% -6.12% 2.13%
Construction 0.09% 0.39% 6.44% -4.43% -2.13% 4.49%
Manufacturing -0.17% -0.15% 5.26% 0.33% 2.21% 10.08%
Transportion, Communication, Electric/Gas -0.26% 0.04% 8.16% 0.36% 2.83% 12.05%
Wholesale -0.02% -0.16% 4.81% -2.18% -0.42% 8.10%
Retail -0.22% -0.24% 5.82% 1.01% 2.80% 11.95%
Finance, Insurance, Real-Estate -0.09% -0.02% 4.20% -0.44% 0.99% 7.67%
Services -0.21% -0.17% 4.59% -0.08% 1.76% 9.93%
Public Administration -0.04% 0.01% 0.38% 2.96% 3.70% 6.21%
Energy -0.19% -0.46% 9.57% -7.54% -6.24% 1.55%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Georgia-Pacific LLC (USD) 1.75% 9/30/2025 144A (04/27/2020): 900MM Senior Unsecured Notes, Price at Issuance 99.98, Yielding 1.75%.

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

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

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

5. 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%.

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

7. 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%.

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

9. 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%.

10. 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%.

Additional Commentary

NEW ISSUANCE WATCH: on 04/28/2020 participants welcome a $1500MM new corporate-bond offering by Biogen Inc.
Top Widening Loans Top Narrowing Loans
McDermott International Inc. (USD) DD L+1000 10/21/2021
Red Ventures (USD) TLB L+250 11/08/2024
GrafTech International LTD (USD) TLB L+350 02/12/2025
Ardent Health Partners LLC (USD) TL L+450 06/28/2025
Tibco Software Inc. (USD) TLB3 L+375 07/03/2026
ProFrac Services LLC (USD) TLB L+575 09/06/2023
Sundyne US Purchaser (USD) TLB L+425 03/17/2027
CSM Bakery (USD) TLB L+400 07/03/2020
Hanger Inc (USD) TLB L+350 03/06/2025
Clear Channel Outdoor Inc. (USD) TLB L+350 08/09/2026

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 74 bp (basis points), as of 04/28/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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