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North American Bond Research – April 29, 2020

Posted on April 29, 2020
HIGH YIELD BOND RESEARCH
April 29, 2020
Bond Markets

GDP CONTRACTED BY 4.8%, BUT THE BAD NEWS WAS ECLIPSED BY GILEAD REPORTING THAT REMEDESIVIR WAS SHOWN TO BE AN EFFECTIVE COVID-19 TREATMENT. OIL PRICES ALSO SHOT UP TO 15.19 A BARREL.  10 Year Treasury notes were up 1.7 basis points. S&P +2.66%, Dow +2.21%, NASDAQ +3.57%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 3.2 MILLION+ CASES AND 227000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 1.06 MILLION+ CASES AND 61000+ 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 +1.9%
  Ford Motor Co. 9% 4/22/2025 +1.0%
  Occidental Petroleum Corp. 2.9% 8/15/2024 +1.4%
  Occidental Petroleum Corp. 2.7% 8/15/2022 +0.3%
  Cenovus Energy Inc. 4.25% 4/15/2027 +10.6%
–   Intl Lease Finance Corp. 4.625% 4/15/2021 -0.1%
  Charter Communications Operating LLC 4.8% 3/1/2050 -1.3%
  RR Donnelley & Sons Co. 6.5% 11/15/2023 -1.5%
  Ford Motor Credit Co. 5.113% 5/3/2029 -0.6%
  Frontier Communications Corp. 11% 9/15/2025 -0.8%
Ford Motor Co.   8.5% 4/21/2023
Ford Motor Co.   9% 4/22/2025
Occidental Petroleum Corp.   2.9% 8/15/2024
Occidental Petroleum Corp.   2.7% 8/15/2022
Cenovus Energy Inc.   4.25% 4/15/2027
Gap Inc.   5.95% 4/12/2021
Ford Motor Co.   9.625% 4/22/2030
Intl Lease Finance Corp.   4.625% 4/15/2021
Charter Communications Operating LLC   4.8% 3/1/2050
Occidental Petroleum Corp.   5.55% 3/15/2026
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.02% -0.54% 10.37% -6.59% -5.32% 5.19%
Mining 0.44% 1.27% 12.78% -32.76% -33.08% -23.58%
Construction 0.22% -0.29% 5.37% -7.67% -6.37% 2.42%
Manufacturing -0.07% -0.91% 6.16% -8.05% -7.15% 0.16%
Transportion, Communication, Electric/Gas -0.02% -0.45% 8.64% -4.88% -4.15% 3.29%
Wholesale 0.16% -0.09% 7.33% -9.82% -8.71% -1.87%
Retail 0.15% -1.02% 4.13% -11.72% -11.12% -2.62%
Finance, Insurance, Real-Estate -0.01% -0.61% 4.79% -9.12% -8.27% -0.57%
Services -0.13% -1.46% 5.45% -8.43% -7.90% 0.94%
Public Administration 0.34% -0.11% 12.95% -7.03% -6.03% 2.53%
Energy 0.52% 1.87% 18.04% -30.06% -30.19% -22.03%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. PolyOne Corp. (USD) 5.75% 5/15/2025 144A (04/29/2020): 650MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.75%.

2. PolyOne Corp. (USD) 5.75% 5/1/2025 Reg S (04/29/2020): 650MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.75%.

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: PolyOne Corp issued 650 MM in notes.
Top Widening Loans Top Narrowing Loans
Befesa SA (EUR) TLB E+250 07/09/2026
GCI Holdings Inc. (USD) TLB L+225 02/02/2022
PHS Group PLC (GBP) TL L+525 11/30/2021
Clay Holdco BV (EUR) TLA E+450 11/01/2025
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
Convergint Technologies LLC (USD) TL L+300 02/01/2025
Entertainment Properties Trust (USD) TL L+110 02/27/2023
NCL Corp. LTD (USD) TLA L+150 01/02/2024
Navios Maritime Partners LP (USD) TLB L+450 06/18/2020
AR Packaging Group (EUR) TLB E+475 08/15/2024

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  66 bp (basis points), as of 04/29/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
April 29, 2020
Bond Markets

GDP CONTRACTED BY 4.8%, BUT THE BAD NEWS WAS ECLIPSED BY GILEAD REPORTING THAT REMEDESIVIR WAS SHOWN TO BE AN EFFECTIVE COVID-19 TREATMENT. OIL PRICES ALSO SHOT UP TO 15.19 A BARREL.  10 Year Treasury notes were up 1.7 basis points. S&P +2.66%, Dow +2.21%, NASDAQ +3.57%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 3.2 MILLION+ CASES AND 227000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 1.06 MILLION+ CASES AND 61000+ 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 +0.6%
  Citigroup Inc. 4.412% 3/31/2031 +0.8%
  Diageo Capital PLC 2% 4/29/2030 +0.1%
  Ford Motor Co. 8.5% 4/21/2023 +1.9%
  Wells Fargo & Co. VAR% 4/30/2026 +0.4%
–   General Electric Co. 4.35% 5/1/2050 -1.4%
  Exxon Mobil Corp. 3.452% 4/15/2051 -0.4%
  General Electric Co. FLT% PERP (1) -1.0%
  JPMorgan Chase & Co. VAR% 4/22/2051 -0.3%
  GE Capital Intl. Funding Co. 4.418% 11/15/2035 -1.1%
Wells Fargo & Co.   3.068% 4/30/2041
General Electric Co.   4.35% 5/1/2050
Citigroup Inc.   4.412% 3/31/2031
Exxon Mobil Corp.   3.452% 4/15/2051
Diageo Capital PLC   2% 4/29/2030
Ford Motor Co.   8.5% 4/21/2023
Wells Fargo & Co.   VAR% 4/30/2026
Marriott Intl Inc.   5.75% 5/1/2025
General Electric Co.   FLT% PERP (1)
Oracle Corp.   3.85% 4/1/2060
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.11% -0.27% 5.30% -0.30% 1.72% 5.11%
Mining 0.15% 0.38% 8.94% -6.90% -5.48% 2.59%
Construction 0.12% 0.72% 6.70% -4.13% -2.27% 4.51%
Manufacturing 0.07% -0.08% 5.37% 0.39% 2.19% 10.03%
Transportion, Communication, Electric/Gas 0.12% 0.04% 8.35% 0.60% 3.00% 12.29%
Wholesale 0.07% 0.07% 4.50% -1.88% -0.24% 7.85%
Retail 0.11% -0.11% 5.87% 1.16% 2.79% 11.92%
Finance, Insurance, Real-Estate 0.08% 0.09% 4.27% -0.34% 1.06% 7.70%
Services 0.10% -0.14% 4.68% 0.22% 1.96% 10.11%
Public Administration 0.06% 0.06% 0.45% 3.02% 3.78% 6.25%
Energy 0.13% 0.09% 9.88% -7.21% -5.96% 1.91%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Northern Trust Corp. (USD) 1.95% 5/1/2030 (04/28/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.621, Yielding 1.99%.

2. Liberty Mutual Group Inc. (USD) 3.95% 5/15/2060 144A (04/28/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.899, Yielding 3.95%.

3. Baker Hughes Inc. (USD) 4.486% 5/1/2030 (04/28/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.49%.

4. Liberty Mutual Group Inc. (USD) 3.95% 5/15/2060 Reg S (04/28/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.899, Yielding 3.95%.

5. Advocate Health Corp. (USD) 2.211% 6/15/2030 (04/28/2020): 300MM Unsecured Notes, Price at Issuance 100, Yielding 2.21%.

6. Advocate Health Corp. (USD) 3.008% 6/15/2050 (04/28/2020): 400MM Unsecured Notes, Price at Issuance 100, Yielding 3.01%.

7. Dupont de Nemours Inc. (USD) 2.169% 5/1/2023 (04/28/2020): 2000MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.17%.

8. Consumers Energy Co. (USD) 2.5% 5/1/2060 (04/29/2020): 525MM Secured Notes, Price at Issuance 99.149, Yielding 2.53%.

9. NXP BV (USD) 3.15% 5/1/2027 144A (04/29/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.801, Yielding 3.18%.

10. NXP BV (USD) 2.7% 5/1/2025 144A (04/29/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.916, Yielding 2.72%.

Additional Commentary

NEW ISSUANCE WATCH: on 04/29/2020 participants welcome a $1000MM new corporate-bond offering by Northern Trust Corp.
Top Widening Loans Top Narrowing Loans
Befesa SA (EUR) TLB E+250 07/09/2026
GCI Holdings Inc. (USD) TLB L+225 02/02/2022
PHS Group PLC (GBP) TL L+525 11/30/2021
Clay Holdco BV (EUR) TLA E+450 11/01/2025
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
Convergint Technologies LLC (USD) TL L+300 02/01/2025
Entertainment Properties Trust (USD) TL L+110 02/27/2023
NCL Corp. LTD (USD) TLA L+150 01/02/2024
Navios Maritime Partners LP (USD) TLB L+450 06/18/2020
AR Packaging Group (EUR) TLB E+475 08/15/2024

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 66 bp (basis points), as of 04/29/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

Copyright 2020 Advantage Data Inc. All Rights Reserved. http://www.advantagedata.com

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