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North American Bond Research – August 18, 2020

Posted on August 18, 2020
HIGH YIELD BOND RESEARCH
August 18, 2020
Bond Markets

MARKETS MIXED TO LOWER AS CORONA VIRUS CASES AND DEATHS ARE SLOWING. APART FROM A FEW STOCKS PUSHING THE INDEXES UP, MANY SMALLER COMPANIES ARE NOT EXPERIENCING MARKET CAP GROWTH. 10 Year Treasury notes were down 1.4 bps. S&P +0.23%, Dow -0.24%, NASDAQ +0.73%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 22.3 MILLION+ CASES AND 783000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 5.7 MILLION+ CASES AND 175000+ 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
+   Petrobras Global Finance BV 6.85% 6/5/2115 +2.1%
  Ford Motor Co. 8.5% 4/21/2023 +0.1%
  Eclipse Resources Corp. 8.875% 7/15/2023 +0.8%
  L Brands Inc. 6.875% 11/1/2035 +1.5%
  Dish DBS Corp. 7.75% 7/1/2026 +0.1%
–   Petrobras Global Finance BV 7.375% 1/17/2027 -0.1%
  T-Mobile USA Inc. 3.75% 4/15/2027 144A -0.1%
  Pacific Gas & Electric Co. 2.95% 3/1/2026 -0.4%
  Teva Pharmaceuticals Fin BV 6.75% 3/1/2028 -3.4%
  Pacific Gas & Electric Co. 3.3% 12/1/2027 -0.9%
Petrobras Global Finance BV   7.375% 1/17/2027
T-Mobile USA Inc.   3.75% 4/15/2027 144A
Pacific Gas & Electric Co.   2.95% 3/1/2026
Petrobras Global Finance BV   6.85% 6/5/2115
Ford Motor Co.   8.5% 4/21/2023
Teva Pharmaceuticals Fin BV   6.75% 3/1/2028
Lincoln Center For The Performing Arts Inc.   3.706% 12/1/2035
Pacific Gas & Electric Co.   3.3% 12/1/2027
Eclipse Resources Corp.   8.875% 7/15/2023
L Brands Inc.   6.875% 11/1/2035
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.07% -0.24% 2.03% 6.93% 5.08% 8.30%
Mining -0.38% -0.60% 3.93% 23.97% -12.11% -7.51%
Construction -0.00% -0.14% 1.48% 9.09% 2.28% 6.08%
Manufacturing -0.10% -0.43% 2.36% 11.00% 1.90% 6.96%
Transportion, Communication, Electric/Gas -0.16% -0.67% 1.62% 7.78% 3.27% 6.57%
Wholesale -0.08% -0.19% 2.40% 9.51% 2.19% 6.36%
Retail -0.11% -0.11% 3.32% 13.78% 0.23% 4.25%
Finance, Insurance, Real-Estate -0.10% -0.16% 2.73% 11.52% 1.01% 4.78%
Services -0.16% -0.31% 2.62% 9.69% 1.44% 6.36%
Public Administration -0.27% -0.36% 3.56% 11.79% 5.39% 8.79%
Energy -0.26% -0.55% 4.32% 22.05% -8.98% -4.44%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. GFL Environmental Inc. (USD) 3.75% 8/1/2025 144A (08/17/2020): 750MM Secured Notes, Price at Issuance 100, Yielding 3.75%.

2. Lamar Media Corp. (USD) 4% 2/15/2030 (08/17/2020): 150MM Senior Unsecured Notes, Price at Issuance 99.5, Yielding 4.06%.

3. NCR Corp. (USD) 5.25% 10/1/2030 144A (08/17/2020): 450MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.25%.

4. NCR Corp. (USD) 5% 10/1/2028 144A (08/17/2020): 650MM Senior Unsecured Notes.

5. NCR Corp. (USD) 5.25% 10/1/2030 Reg S (08/17/2020): 450MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.25%.

6. NCR Corp. (USD) 5% 10/1/2028 Reg S (08/17/2020): 650MM Senior Unsecured Notes.

7. GFL Environmental Inc. (USD) 3.75% 8/1/2025 Reg S (08/17/2020): 750MM Secured Notes, Price at Issuance 100, Yielding 3.75%.

8. Southwestern Energy Co. (USD) 8.375% 9/15/2028 (08/18/2020): 350MM Senior Unsecured Notes, Price at Issuance 100, Yielding 8.38%.

9. Range Resources Corp. (USD) 9.25% 2/1/2026 (08/18/2020): 300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 9.25%.

1. CJ Foods Inc.: $285MM TLB

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

3. UPC/Sunrise: $2.4B term loans (B1/BB-/BB+): $1.2B TLB1; $1.2B TLB2

4. MAG Aerospace: $290.7MM TL (B3/B)

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

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

7. MAG Aerospace: $290.7MM TL (B3/B)

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

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

10. CJ Foods Inc.: $285MM TLB

Additional Commentary

NEW ISSUANCE WATCH: GFL Environmental Inc. issued 750 MM in notes.
Top Widening Loans Top Narrowing Loans
PDC Brands (USD) TLB L+475 06/29/2024
NCL Corp. LTD (USD) TLA L+150 01/02/2024
United PF Holdings LLC (USD) TL L+400 01/06/2027
nThrive Inc. (USD) TLB L+450 10/20/2022
Drilling Info Inc. (USD) TL L+425 07/30/2025
Dynatrace LLC (USD) TL L+225 08/23/2025
Deoleo SA (EUR) TL2 E+675 06/12/2022
Imperva Inc. (USD) TL2 L+775 01/10/2027
Help/Systems LLC (USD) TL L+475 11/30/2026
Web.com Group Inc. (USD) TL2 L+775 09/17/2026

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 18 bp (basis points), as of 08/18/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
August 18, 2020
Bond Markets

MARKETS MIXED TO LOWER AS CORONA VIRUS CASES AND DEATHS ARE SLOWING. APART FROM A FEW STOCKS PUSHING THE INDEXES UP, MANY SMALLER COMPANIES ARE NOT EXPERIENCING MARKET CAP GROWTH. 10 Year Treasury notes were down 1.4 bps. S&P +0.23%, Dow -0.24%, NASDAQ +0.73%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 22.3 MILLION+ CASES AND 783000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 5.7 MILLION+ CASES AND 175000+ 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
+   Apple Inc. 2.55% 8/20/2060 +1.3%
  Alphabet Inc. 2.25% 8/15/2060 +1.6%
  Coca-Cola Co. 1.65% 6/1/2030 +0.1%
  Apple Inc. 2.4% 8/20/2050 +0.9%
  Microsoft Corp. 2.525% 6/1/2050 +0.6%
–   Oracle Corp. 3.6% 4/1/2050 -0.1%
  General Motors Financial Co. Inc. 3.6% 6/21/2030 -0.0%
  Dupont de Nemours Inc. 2.169% 5/1/2023 -0.0%
  Oracle Corp. 3.85% 4/1/2060 -1.3%
  AT&T Inc. 2.25% 2/1/2032 -0.3%
Oracle Corp.   3.6% 4/1/2050
Apple Inc.   2.55% 8/20/2060
Alphabet Inc.   2.25% 8/15/2060
Coca-Cola Co.   1.65% 6/1/2030
Apple Inc.   2.4% 8/20/2050
General Motors Financial Co. Inc.   3.6% 6/21/2030
Dupont de Nemours Inc.   2.169% 5/1/2023
Microsoft Corp.   2.525% 6/1/2050
CVS Health Corp.   1.75% 8/21/2030
Oracle Corp.   3.85% 4/1/2060
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.31% -1.09% 1.42% 10.44% 5.25% 6.23%
Construction -0.35% -0.92% 0.97% 7.50% 4.69% 4.76%
Manufacturing -0.27% -1.29% 0.15% 5.43% 6.83% 7.49%
Transportion, Communication, Electric/Gas -0.42% -1.89% -0.15% 6.69% 8.46% 8.82%
Wholesale -0.23% -0.85% 0.67% 6.94% 6.11% 8.64%
Retail -0.40% -1.76% -0.57% 5.28% 7.94% 9.31%
Finance, Insurance, Real-Estate -0.19% -0.74% 0.42% 4.99% 5.94% 6.89%
Services -0.24% -1.05% 0.21% 5.69% 6.32% 7.03%
Public Administration -0.23% -0.09% -0.14% 0.26% 4.30% 3.79%
Energy -0.34% -1.22% 1.13% 10.23% 4.61% 5.88%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Honeywell Intl. Inc. (USD) 0.483% 8/19/2022 (08/17/2020): 2500MM Senior Unsecured Notes, Price at Issuance 100, Yielding .48%.

2. Honeywell Intl. Inc. (USD) FLT% 8/19/2022 (08/17/2020): 500MM Senior Unsecured Notes, Price at Issuance 100.

3. Oglethorpe Power Corp. (USD) 3.75% 8/1/2050 144A (08/17/2020): 450MM Secured Notes, Price at Issuance 98.532, Yielding 3.83%.

4. Oglethorpe Power Corp. (USD) 3.75% 8/1/2050 Reg S (08/17/2020): 450MM Secured Notes, Price at Issuance 98.532, Yielding 3.83%.

5. Southern Co Gas Cap Corp (USD) 1.75% 1/15/2031 (08/17/2020): 500MM Senior Unsecured Notes.

6. Santander UK Group Hldg PLC (USD) VAR% 8/21/2026 (08/17/2020): 1000MM Senior Unsecured Notes, Price at Issuance 100.

7. General Motors Financial Co. Inc. (USD) 1.7% 8/18/2023 (08/17/2020): 1250MM Senior Unsecured Notes, Price at Issuance 99.904, Yielding 1.73%.

8. General Motors Financial Co. Inc. (USD) 2.7% 8/20/2027 (08/17/2020): 900MM Senior Unsecured Notes, Price at Issuance 99.778, Yielding 2.74%.

9. Dow Chemical Co. (USD) 2.1% 11/15/2030 (08/17/2020): 850MM Senior Unsecured Notes, Price at Issuance 99.176, Yielding 2.19%.

10. Dow Chemical Co. (USD) 3.6% 11/15/2050 (08/17/2020): 1150MM Senior Unsecured Notes, Price at Issuance 99.26, Yielding 3.64%.

Additional Commentary

NEW ISSUANCE WATCH:   Honeywell Intl. Inc. issued 3000 MM in notes.
Top Widening Loans Top Narrowing Loans
PDC Brands (USD) TLB L+475 06/29/2024
NCL Corp. LTD (USD) TLA L+150 01/02/2024
United PF Holdings LLC (USD) TL L+400 01/06/2027
nThrive Inc. (USD) TLB L+450 10/20/2022
Drilling Info Inc. (USD) TL L+425 07/30/2025
Dynatrace LLC (USD) TL L+225 08/23/2025
Deoleo SA (EUR) TL2 E+675 06/12/2022
Imperva Inc. (USD) TL2 L+775 01/10/2027
Help/Systems LLC (USD) TL L+475 11/30/2026
Web.com Group Inc. (USD) TL2 L+775 09/17/2026

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 18 bp (basis points), as of 08/18/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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