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North American Bond Research – August 13, 2020

Posted on August 13, 2020
HIGH YIELD BOND RESEARCH
August 13, 2020
Bond Markets

EUROPEAN MARKETS DOWN AS TRUMP CHOOSES TO KEEP TARIFFS ON AIRBUS AND DURABLE GOODS IN PLACE. US MARKETS ALSO DOWN AS US TREASURIES AND CORPORATE BOND PRIMARY OFFERINGS STRUGGLES TO FILL.  10 Year Treasury notes were up 4.6 bps. S&P -0.2%, Dow -0.29%, NASDAQ +0.27%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 21 MILLION+ CASES AND 751000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 5.4 MILLION+ CASES AND 170000+ DEATHS.  Among high-grade bonds showing topmost price gains at appreciable volumes traded, Hertz Corp (The) (USD) 7% 1/15/2028 made analysts’ ‘Conviction Buy’ list. (See the chart below for Hertz Corp  bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Eclipse Resources Corp. 8.875% 7/15/2023 +0.4%
  Comstock Resources Inc. 9.75% 8/15/2026 +1.6%
  BNP Paribas VAR% PERP Reg S +0.0%
  Occidental Petroleum Corp. FLT% 8/15/2022 +0.2%
  Enbridge Inc. 5.75% 7/15/2080 +0.5%
–   T-Mobile USA Inc. 3.875% 4/15/2030 144A -0.7%
  Ball Corp. 2.875% 8/15/2030 -0.4%
  T-Mobile USA Inc. 3.5% 4/15/2025 144A -0.1%
  T-Mobile USA Inc. 3.75% 4/15/2027 144A -0.5%
  Pacific Gas & Electric Co. 4.55% 7/1/2030 -2.1%
Eclipse Resources Corp.   8.875% 7/15/2023
T-Mobile USA Inc.   3.875% 4/15/2030 144A
Ball Corp.   2.875% 8/15/2030
T-Mobile USA Inc.   3.5% 4/15/2025 144A
T-Mobile USA Inc.   3.75% 4/15/2027 144A
Pacific Gas & Electric Co.   4.55% 7/1/2030
Petrobras Global Finance BV   6.85% 6/5/2115
Ford Motor Co.   8.5% 4/21/2023
CDW LLC CDW Finance Corp.   3.25% 2/15/2029
Service Corp. Intl.   3.375% 8/15/2030
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.09% 0.43% 3.65% 7.05% 5.23% 8.69%
Mining -0.06% 0.35% 5.85% 23.99% -9.61% -5.09%
Construction -0.01% 0.20% 3.88% 9.86% 3.83% 8.09%
Manufacturing -0.11% 0.12% 3.68% 10.69% 2.02% 7.07%
Transportion, Communication, Electric/Gas -0.14% 0.02% 2.92% 7.70% 3.82% 7.11%
Wholesale -0.09% 0.13% 3.42% 10.66% 2.37% 6.30%
Retail 0.02% 0.08% 4.71% 12.61% 0.69% 4.64%
Finance, Insurance, Real-Estate -0.05% 0.32% 3.51% 10.31% 1.78% 5.92%
Services -0.07% 0.23% 3.96% 9.37% 1.96% 6.80%
Public Administration 0.21% 0.90% 4.68% 12.18% 6.11% 9.52%
Energy -0.05% 0.24% 5.95% 22.37% -7.76% -3.21%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Firstcash Inc. (USD) 4.625% 9/1/2028 144A (08/12/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.63%.

2. Occidental Petroleum Corp. (USD) 6.625% 9/1/2030 (08/12/2020): 1500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.63%.

3. Occidental Petroleum Corp. (USD) 6.375% 9/1/2028 (08/12/2020): 600MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.38%.

4. Occidental Petroleum Corp. (USD) 5.875% 9/1/2025 (08/12/2020): 900MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.88%.

5. Booz Allen Hamilton Inc. (USD) 3.875% 9/1/2028 144A (08/12/2020): 700MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.88%.

6. Firstcash Inc. (USD) 4.625% 9/1/2028 Reg S (08/12/2020): 100MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.63%.

7. Booz Allen Hamilton Inc. (USD) 3.875% 9/1/2028 Reg S (08/12/2020): 100MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.88%.

8. Black Knight InfoServ LLC (USD) 3.625% 9/1/2028 144A (08/12/2020): 1000MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.63%.

9. Black Knight InfoServ LLC (USD) 3.625% 9/1/2028 Reg S (08/12/2020): 1000MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.63%.

10. ANGI Homeservices Inc. (USD) 3.875% 8/15/2028 144A (08/13/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.88%.

1. Smart Start Inc.: $350MM TLB

2. RSA: $1.425B credit facilities: $75MM revolver; $1B TL; $350MM TL

3. MAG Aerospace: $290.7MM TL (B3/B)

4. Logmein Inc.: $2.45B credit facilities: $1.95B first lien TL; $500MM second-lien TL

5. Herschend Entertainment Co. LLC: $465MM TLB (B3/B)

6. CJ Foods Inc.: $285MM TLB

7. Tutor Perini: $375MM TLB (Ba3/BB-/BB+)

8. Herschend Entertainment Co. LLC: $465MM TLB (B3/B)

9. Logmein Inc.: $2.45B credit facilities: $1.95B first lien TL; $500MM second-lien TL

10. MAG Aerospace: $290.7MM TL (B3/B)

Additional Commentary

NEW ISSUANCE WATCH:  Firstcash Inc. issued 500 MM in notes.
Top Widening Loans Top Narrowing Loans
Halcon Resources Corp. (USD) RC L+375 05/27/2021
Deoleo SA (EUR) TL2 E+675 06/12/2022
Herbalife LTD (USD) TLB L+325 08/16/2025
Albertsons LLC (USD) TLB8 L+275 08/17/2026
Mavenir Inc. (USD) TLB L+600 05/08/2025
NCR Corp. (USD) DDB L+250 08/28/2026
Wynn Resorts LTD. (USD) TL L+170 07/24/2025
NCL Corp. LTD (USD) TLA L+150 01/02/2024
Sequa Corp. (USD) TLB L+500 11/28/2021
Sound Inpatient Physicians Inc. (USD) RC 06/28/2023

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 17 bp (basis points), as of 08/13/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
August 13, 2020
Bond Markets

EUROPEAN MARKETS DOWN AS TRUMP CHOOSES TO KEEP TARIFFS ON AIRBUS AND DURABLE GOODS IN PLACE. US MARKETS ALSO DOWN AS US TREASURIES AND CORPORATE BOND PRIMARY OFFERINGS STRUGGLES TO FILL.  10 Year Treasury notes were up 4.6 bps. S&P -0.2%, Dow -0.29%, NASDAQ +0.27%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 21 MILLION+ CASES AND 751000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 5.4 MILLION+ CASES AND 170000+ DEATHS.  Among high-grade bonds showing topmost price gains at appreciable volumes traded, Halliburton Co. (USD) 5% 11/15/2045 made analysts’ ‘Conviction Buy’ list. (See the chart below for Halliburton Co.  bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Marriott Intl Inc. 5.75% 5/1/2025 +0.0%
  MPLX LP FLT% 9/9/2021 +0.1%
  Walgreens Boots Alliance Inc. 3.45% 6/1/2026 +0.5%
  Morgan Stanley 2.75% 5/19/2022 +0.0%
  Alphabet Inc. 0.45% 8/15/2025 +0.1%
–   Alphabet Inc. 1.1% 8/15/2030 -0.3%
  Comcast Corp. 1.5% 2/15/2031 -0.4%
  Boeing Co. 5.805% 5/1/2050 -1.4%
  Regeneron Pharmaceuticals Inc. 2.8% 9/15/2050 -1.5%
  Host Hotels & Resorts LP 3.5% 9/15/2030 -0.2%
Alphabet Inc.   1.1% 8/15/2030
Comcast Corp.   1.5% 2/15/2031
Boeing Co.   5.805% 5/1/2050
Regeneron Pharmaceuticals Inc.   2.8% 9/15/2050
Host Hotels & Resorts LP   3.5% 9/15/2030
Wells Fargo Bank NA   3.625% 10/22/2021
Marriott Intl Inc.   5.75% 5/1/2025
Comcast Corp.   2.65% 8/15/2062
Sumitomo Mitsui Fin Grp Inc.   2.13% 7/8/2030
Alphabet Inc.   0.8% 8/15/2027
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.25% -0.21% 2.77% 11.81% 6.01% 7.61%
Construction -0.13% -0.06% 1.73% 8.47% 4.70% 5.35%
Manufacturing -0.31% -0.40% 1.49% 6.98% 7.76% 9.34%
Transportion, Communication, Electric/Gas -0.43% -0.65% 1.74% 8.42% 9.58% 10.93%
Wholesale -0.24% -0.16% 1.94% 8.01% 6.79% 10.07%
Retail -0.37% -0.63% 1.10% 7.26% 9.21% 11.57%
Finance, Insurance, Real-Estate -0.10% -0.10% 1.14% 5.46% 6.08% 7.60%
Services -0.25% -0.38% 1.27% 6.71% 7.25% 8.76%
Public Administration -0.04% -0.13% 0.41% 0.59% 4.70% 4.37%
Energy -0.26% -0.19% 2.49% 11.54% 5.41% 7.33%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. CVS Health Corp (USD) 2.7% 8/21/2040 (08/12/2020): 1250MM Senior Unsecured Notes, Price at Issuance 99.954, Yielding 2.7%.

2. Agree LP (USD) 2.9% 10/1/2030 (08/12/2020): 350MM Senior Unsecured Notes, Price at Issuance 99.927, Yielding 2.91%.

3. Public Service Co. Of New Hampshire (USD) 2.4% 9/1/2050 (08/12/2020): 150MM Secured Notes, Price at Issuance 99.152, Yielding 2.44%.

4. Marriott International Inc. (USD) 3.5% 10/15/2032 (08/12/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.278, Yielding 3.57%.

5. CVS Health Corp (USD) 1.75% 8/21/2030 (08/12/2020): 1250MM Senior Unsecured Notes, Price at Issuance 99.836, Yielding 1.77%.

6. Public Service Enterprise Group (USD) 0.8% 8/15/2025 (08/12/2020): 550MM Senior Unsecured Notes, Price at Issuance 99.775, Yielding .85%.

7. Public Service Enterprise Group (USD) 1.6% 8/15/2030 (08/12/2020): 550MM Senior Unsecured Notes, Price at Issuance 99.816, Yielding 1.62%.

8. NiSource Inc. (USD) 0.95% 8/15/2025 (08/12/2020): 1250MM Senior Unsecured Notes, Price at Issuance 99.752, Yielding 1%.

9. CVS Health Corp (USD) 1.3% 8/21/2027 (08/12/2020): 1500MM Senior Unsecured Notes, Price at Issuance 99.72, Yielding 1.34%.

10. Ford Motor Credit Co. (USD) 3.37% 11/17/2023 (08/12/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.988, Yielding 3.37%.

Additional Commentary

NEW ISSUANCE WATCH:   Marriott International Inc. issued 1100 MM in notes.
Top Widening Loans Top Narrowing Loans
Halcon Resources Corp. (USD) RC L+375 05/27/2021
Deoleo SA (EUR) TL2 E+675 06/12/2022
Herbalife LTD (USD) TLB L+325 08/16/2025
Albertsons LLC (USD) TLB8 L+275 08/17/2026
Mavenir Inc. (USD) TLB L+600 05/08/2025
NCR Corp. (USD) DDB L+250 08/28/2026
Wynn Resorts LTD. (USD) TL L+170 07/24/2025
NCL Corp. LTD (USD) TLA L+150 01/02/2024
Sequa Corp. (USD) TLB L+500 11/28/2021
Sound Inpatient Physicians Inc. (USD) RC 06/28/2023

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 17 bp (basis points), as of 08/13/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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