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North American Bond Research – April 6, 2020

Posted on April 6, 2020
HIGH YIELD BOND RESEARCH
April 6, 2020
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, 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
+   Intelsat Jackson Hldg SA 5.5% 8/1/2023 (1) +5.5%
  Dish DBS Corp. 7.75% 7/1/2026 +3.2%
  Discover Financial Services VAR% PERP +8.2%
  Ford Motor Co. 5.291% 12/8/2046 +0.4%
  Charter Communications Operating LLC 4.8% 3/1/2050 +1.1%
–   General Motors Co. 6.25% 10/2/2043 -4.6%
  Micron Technology Inc. 4.663% 2/15/2030 -1.8%
  General Motors Financial Co. Inc. 4.375% 9/25/2021 -0.2%
  Ford Motor Co. 4.75% 1/15/2043 -0.9%
  Ford Motor Credit Co. 4.134% 8/4/2025 -1.0%
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
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.14% 3.42% -11.77% -11.82% -11.29% -0.29%
Mining 0.87% 0.41% -35.15% -39.59% -38.97% -31.25%
Construction -0.41% 0.64% -11.69% -9.97% -9.82% 0.05%
Manufacturing -0.57% 0.79% -11.73% -11.13% -10.74% -2.03%
Transportion, Communication, Electric/Gas -0.33% 0.34% -11.99% -10.82% -10.57% -1.44%
Wholesale -0.41% 1.11% -14.57% -14.70% -14.39% -5.99%
Retail -0.63% -0.37% -16.27% -16.14% -15.97% -3.59%
Finance, Insurance, Real-Estate -0.59% 0.62% -12.31% -11.53% -11.30% -1.33%
Services -0.95% 0.13% -12.50% -12.18% -11.99% -2.68%
Public Administration 0.48% 4.98% -14.65% -13.04% -12.74% -4.56%
Energy 0.95% 1.09% -35.10% -39.19% -38.67% -31.78%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 04/06/2020)
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

 

INVESTMENT GRADE BOND RESEARCH
April 6, 2020
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
+   Cigna Corp. 3.4% 3/15/2050 +2.8%
  Oracle Corp. 3.6% 4/1/2050 +0.3%
  Ross Stores Inc. 5.45% 4/15/2050 +1.2%
  Wells Fargo & Co. 5.013% 4/4/2051 +5.9%
  3M Co. 3.7% 4/15/2050 +0.3%
–   Intel Corp. 3.9% 3/25/2030 -0.1%
  Lloyds Banking Group PLC VAR% 7/9/2025 -0.1%
  Amgen Inc. 3.375% 2/21/2050 -0.1%
  Visa Inc. 2.05% 4/15/2030 -0.3%
  Santander Hldg USA 4.45% 12/3/2021 -0.8%
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
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.40% 1.46% -6.45% -2.92% -2.68% 4.41%
Mining 0.60% 1.31% -16.57% -14.87% -14.38% -3.35%
Construction 0.10% 0.48% -10.76% -7.81% -7.13% 1.63%
Manufacturing -0.08% 1.09% -5.47% -2.12% -1.61% 7.33%
Transportion, Communication, Electric/Gas -0.02% 1.68% -7.46% -3.63% -2.90% 7.62%
Wholesale -0.21% 0.13% -7.19% -4.74% -4.35% 4.46%
Retail -0.05% 1.21% -5.72% -2.34% -1.78% 7.66%
Finance, Insurance, Real-Estate -0.08% 1.04% -5.00% -2.24% -1.85% 5.57%
Services -0.12% 0.74% -5.64% -2.06% -1.61% 7.45%
Public Administration 0.04% 0.22% 0.90% 3.18% 3.41% 6.27%
Energy 0.43% 1.74% -15.66% -13.97% -13.46% -3.65%
 
Total returns (non-annualized) by rating, market weighted.

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

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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