MARKETS STARTED WAY UP DUE TO THE HUGE GAINS FROM YESTERDAY. But by midday, ad more cases and deaths were reported, reality set in that we have a long way to go before this is over. The market ended slightly lower. 10 Year Treasury notes were up 6 basis points. S&P -0.16%, Dow -0.12%, NASDAQ -0.33%.
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Market Summaries
North American Bond Research – April 7, 2020
Posted on April 7, 2020|
HIGH YIELD BOND RESEARCH
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April 7, 2020
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Bond Markets
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 1450000+ CASES AND 81000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 365000+ CASES AND 13000+ 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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General Motors Co. 6.25% 10/2/2043 Intelsat Jackson Hldg SA 5.5% 8/1/2023 (1) Continental Res Inc. 4.5% 4/15/2023 Continental Res Inc. 5% 9/15/2022 Micron Technology Inc. 4.663% 2/15/2030 Petrobras Global Finance BV 7.375% 1/17/2027 Intelsat Luxembourg SA 8.125% 6/1/2023 Cenovus Energy Inc. 3% 8/15/2022 Expedia Inc. 3.8% 2/15/2028 (1) Sabine Pass Liquefaction LLC 5.625% 2/1/2021 (1) |
| Industry Returns Tracker | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| New Issues | Forward Calendar |
|---|---|
| 1. LifePoint Health Inc (USD) 6.75% 4/15/2025 144A (04/07/2020): 600MM First Lien Notes, Price at Issuance 100, Yielding 6.75%. | 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: LifePoint Health issued $600MM debt on 4/7/2020.
| Top Widening Loans | Top Narrowing Loans |
| Jostens Inc. (USD) TL L+550 12/21/2025 Institutional Shareholder Services Inc. (USD) TL L+450 03/05/2026 GVC Holdings PLC (USD) TLB L+225 03/16/2024 Eaglepicher Inc. (USD) TL L+725 03/09/2026 Core & Main LP (USD) TLB L+300 08/01/2024 |
Bombardier Recreational Products Inc. (USD) TLB L+200 05/07/2025 Verisure Holding AB (EUR) TLB1E E+300 10/21/2022 Atlantic Aviation Fbo Inc. (USD) TLB L+375 12/06/2025 Element Materials Technology Group (USD) TLB L+350 06/05/2024 DTZ US Borrower LLC (USD) TLB L+275 08/21/2025 |
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 127 bp (basis points), as of 04/7/2020
- Net negative capital flows into high-yield ETFs & mutual funds
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INVESTMENT GRADE BOND RESEARCH
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April 7, 2020
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Bond Markets
MARKETS STARTED WAY UP DUE TO THE HUGE GAINS FROM YESTERDAY. BUT BY MIDDAY AS MORE CASES AND DEATHS WERE REPORTED, REALITY SET IN THAT WE HAVE A LONG WAY TO GO BEFORE THIS IS OVER. THE MARKET ENDED SLIGHTLY LOWER. 10 Year Treasury notes were down 4 basis points. S&P -0.16%, Dow -0.12%, NASDAQ -0.33%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 1450000+ CASES AND 81000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 365000+ CASES AND 13000+ 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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Oracle Corp. 3.6% 4/1/2050 Oracle Corp. 2.5% 4/1/2025 FedEx Corp. 3.8% 5/15/2025 Anheuser-Busch Inbev Worldwide Inc. 4.5% 6/1/2050 VMWARE Inc. 4.7% 5/15/2030 Oracle Corp. 3.85% 4/1/2060 Royal Bank of Canada 2.25% 11/1/2024 Goldman Sachs Group Inc. 3.5% 4/1/2025 Wells Fargo & Co. VAR% 2/11/2031 Oracle Corp. 3.6% 4/1/2040 |
| Industry Returns Tracker | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| New Issues | New Issues [Continued] |
|---|---|
| 1. Sinai Health System (CAD) 3.209% 4/8/2060 (04/06/2020): 200MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.21%.
2. Burlingtn NTHN San (USD) 3.05% 2/15/2051 (04/06/2020): 575MM Senior Unsecured Notes, Price at Issuance 99.171, Yielding 3.09%. 3. Tucson Electric Power Co. (USD) 4% 6/15/2050 (04/06/2020): 350MM Senior Unsecured Notes, Price at Issuance 99.138, Yielding 4.05%. 4. Analog Devices Inc. (USD) 2.95% 4/1/2025 (04/06/2020): 400MM Senior Unsecured Notes, Price at Issuance 99.496, Yielding 3.06%. 5. Mitsubishi Ufj Lease&Fin (USD) 3.637% 4/13/2025 (04/06/2020): 450MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.64%. 6. Pacificorp (USD) 3.3% 3/15/2051 (04/06/2020): 600MM Secured Notes, Price at Issuance 99.176, Yielding 3.34%. 7. 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%. 8. 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%. 9. Pacificorp (USD) 2.7% 9/15/2030 (04/06/2020): 400MM Secured Notes, Price at Issuance 99.82, Yielding 2.72%. 10. 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%.
(None Current 04/07/2020)
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Additional Commentary
NEW ISSUANCE WATCH: on 04/03/2020 participants welcome a $4500MM new corporate-bond offering by BMW US Capital LLC.
| Top Widening Loans | Top Narrowing Loans |
| Jostens Inc. (USD) TL L+550 12/21/2025 Institutional Shareholder Services Inc. (USD) TL L+450 03/05/2026 GVC Holdings PLC (USD) TLB L+225 03/16/2024 Eaglepicher Inc. (USD) TL L+725 03/09/2026 Core & Main LP (USD) TLB L+300 08/01/2024 |
Bombardier Recreational Products Inc. (USD) TLB L+200 05/07/2025 Verisure Holding AB (EUR) TLB1E E+300 10/21/2022 Atlantic Aviation Fbo Inc. (USD) TLB L+375 12/06/2025 Element Materials Technology Group (USD) TLB L+350 06/05/2024 DTZ US Borrower LLC (USD) TLB L+275 08/21/2025 |
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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