MARKETS TOOK OFF AS CORONAVIRUS SEEMS TO BE APPROACHING ITS APEX IN EUROPE AND THE UNITED STATES. BORIS JOHNSON IS HOSPITALIZED AND IN INTENSIVE CARE. 10 Year Treasury notes were down 4 basis points. S&P +7.5%, Dow +7.73%, NASDAQ +8.24%.
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Market Summaries
North American Bond Research – April 6, 2020
Posted on April 6, 2020|
HIGH YIELD BOND RESEARCH
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April 6, 2020
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Bond Markets
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 1350000+ CASES AND 75000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 365000+ CASES AND 10800+ DEATHS. Among high-grade bonds showing topmost price gains at appreciable volumes traded, Ford Motor Co (USD) 7.4% 11/1/2046 made analysts’ ‘Conviction Buy’ list. (See the chart below for Ford Motor Co bonds) Pierre Robert
| Key Gainers and Losers | Volume Leaders | ||||||||||||||||||||||||||||||
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Intelsat Jackson Hldg SA 5.5% 8/1/2023 (1) General Motors Co. 6.25% 10/2/2043 Dish DBS Corp. 7.75% 7/1/2026 Micron Technology Inc. 4.663% 2/15/2030 Discover Financial Services VAR% PERP Ford Motor Co. 5.291% 12/8/2046 Charter Communications Operating LLC 4.8% 3/1/2050 Intelsat Luxembourg SA 8.125% 6/1/2023 Expedia Inc. 5% 2/15/2026 General Motors Financial Co. Inc. 4.375% 9/25/2021 |
| Industry Returns Tracker | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| New Issues | Forward Calendar |
|---|---|
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(None Current 04/06/2020)
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1. AVI-SPL: $370MM covenant lite TLB (B2/B)
2. Service Logic: $140MM bank debt: $40MM TL; $100MM DD TL 3. CJ Foods Inc.: $285MM TLB 4. Cornerstone Ondemand Inc.: $1.135MM senior secured credit facilities: $150MM revolver; $985MM TLB 5. Eldorado Resorts Inc./Caesars Entertainment Corp.: $6.4B credit facilities:$1B revolver at Eldorados; $3B seven-year cove-lite TLB due 2027 at Eldorado; $2.4B seven-year cove-lite TLB due 2027 at Caesars Resorts Collection 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. Tata Chemicals North America Inc. : $380MM TL (Ba3) |
Additional Commentary
NEW ISSUANCE WATCH: No new issues on 4/6/2020.
| Top Widening Loans | Top Narrowing Loans |
| TierPoint LLC (USD) TL L+725 04/27/2025 J Crew Group Inc. (USD) TLB L+322 03/06/2021 Safe Fleet Acquisition Corp. (USD) TL L+300 02/01/2025 Wittur (EUR) TLB E+450 09/23/2026 Arvos Holding (EUR) TLB2 E+450 08/29/2021 |
Air Canada (CAD) RC 12/18/2021 Hamilton Holdco LLC (USD) TLB L+200 01/02/2027 Prosol Gestion (EUR) TLB E+400 04/21/2024 Concordia International (EUR) TL E+525 09/06/2024 Automatic Data Processing Inc. (USD) RC L+30 06/13/2023 |
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 131 bp (basis points), as of 04/6/2020
- Net negative capital flows into high-yield ETFs & mutual funds
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INVESTMENT GRADE BOND RESEARCH
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April 6, 2020
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Bond Markets
MARKETS TOOK OFF AS CORONAVIRUS SEEMS TO BE APPROACHING ITS APEX IN EUROPE AND THE UNITED STATES. BORIS JOHNSON IS HOSPITALIZED AND IN INTENSIVE CARE. 10 Year Treasury notes were down 4 basis points. S&P +7.5%, Dow +7.73%, NASDAQ +8.24%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 1350000+ CASES AND 75000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 365000+ CASES AND 10800+ DEATHS. Among high-grade bonds showing topmost price gains at appreciable volumes traded, Baker Hughes Inc. (USD) 4.08% 12/15/2047 made analysts’ ‘Conviction Buy’ list. (See the chart below for Baker Hughes Inc. bonds) Pierre Robert
| Key Gainers and Losers | Volume Leaders | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
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Intel Corp. 3.9% 3/25/2030 Lloyds Banking Group PLC VAR% 7/9/2025 Cigna Corp. 3.4% 3/15/2050 Oracle Corp. 3.6% 4/1/2050 Ross Stores Inc. 5.45% 4/15/2050 Amgen Inc. 3.375% 2/21/2050 Wells Fargo & Co. 5.013% 4/4/2051 3M Co. 3.7% 4/15/2050 Oracle Corp. 2.5% 4/1/2025 Visa Inc. 2.05% 4/15/2030 |
| Industry Returns Tracker | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| New Issues | New Issues [Continued] |
|---|---|
| 1. Burlingtn NTHN San (USD) 3.05% 2/15/2051 (04/06/2020): 575MM Senior Unsecured Notes, Price at Issuance 99.171, Yielding 3.09%.
2. Tucson Electric Power Co. (USD) 4% 6/15/2050 (04/06/2020): 350MM Senior Unsecured Notes, Price at Issuance 99.138, Yielding 4.05%. 3. Analog Devices Inc. (USD) 2.95% 4/1/2025 (04/06/2020): 400MM Senior Unsecured Notes, Price at Issuance 99.496, Yielding 3.06%. 4. Mitsubishi Ufj Lease&Fin (USD) 3.637% 4/13/2025 (04/06/2020): 450MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.64%. 5. Pacificorp (USD) 3.3% 3/15/2051 (04/06/2020): 600MM Secured Notes, Price at Issuance 99.176, Yielding 3.34%. 6. BMW US Capital LLC (USD) 4.15% 4/9/2030 (04/06/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.854, Yielding 4.17%. 7. BMW US Capital LLC (USD) 3.8% 4/6/2023 (04/06/2020): 1500MM Senior Unsecured Notes, Price at Issuance 99.897, Yielding 3.84%. 8. Pacificorp (USD) 2.7% 9/15/2030 (04/06/2020): 400MM Secured Notes, Price at Issuance 99.82, Yielding 2.72%. 9. BMW US Capital LLC (USD) 3.9% 4/9/2025 144A (04/06/2020): 1500MM Senior Unsecured Notes, Price at Issuance 99.829, Yielding 3.94%. 10. Broadcom LTD (USD) 4.7% 4/15/2025 144A (04/06/2020): 2250MM Senior Unsecured Notes, Price at Issuance 99.99, Yielding 4.7%. |
Additional Commentary
NEW ISSUANCE WATCH: on 04/03/2020 participants welcome a $2500MM new corporate-bond offering by BMW US Capital LLC.
| Top Widening Loans | Top Narrowing Loans |
| TierPoint LLC (USD) TL L+725 04/27/2025 J Crew Group Inc. (USD) TLB L+322 03/06/2021 Safe Fleet Acquisition Corp. (USD) TL L+300 02/01/2025 Wittur (EUR) TLB E+450 09/23/2026 Arvos Holding (EUR) TLB2 E+450 08/29/2021 |
Air Canada (CAD) RC 12/18/2021 Hamilton Holdco LLC (USD) TLB L+200 01/02/2027 Prosol Gestion (EUR) TLB E+400 04/21/2024 Concordia International (EUR) TL E+525 09/06/2024 Automatic Data Processing Inc. (USD) RC L+30 06/13/2023 |
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 131 bp (basis points), as of 04/6/2020
- Net positive capital flows into high-yield ETFs & mutual funds
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