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North American Bond Research – August 19, 2020

Posted on August 19, 2020
HIGH YIELD BOND RESEARCH
August 19, 2020
Bond Markets

DOLLAR POPPED AND MARKETS WERE DOWN TODAY AS THE FED TAKES A WAIT AND SEE ATTITUDE AND KEPT RATES UNCHANGED. GOLD, SILVER, BITCOIN AND OIL WERE ALL DOWN DUE TO THE POP IN THE DOLLAR.  10 Year Treasury notes were down 1.4 bps. S&P -0.44%, Dow -0.31%, NASDAQ -0.57%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 22.5 MILLION+ CASES AND 787000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 5.7 MILLION+ CASES AND 176000+ 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 7.375% 1/17/2027 +0.2%
  Ball Corp. 2.875% 8/15/2030 +0.4%
  Ally Financial Inc. 3.875% 5/21/2024 +1.4%
  CBL & Associates LP 5.25% 12/1/2023 +43.8%
  Howmet Aerospace Inc. 6.875% 5/1/2025 +0.1%
–   Petrobras Global Finance BV 8.75% 5/23/2026 -0.7%
  Petrobras Global Finance BV 6.85% 6/5/2115 -1.1%
  Teva Pharmaceuticals Fin BV 6.75% 3/1/2028 -4.0%
  Pacific Gas & Electric Co. 4.95% 7/1/2050 -1.7%
  Equitable Hldg Inc. VAR% PERP -2.3%
Petrobras Global Finance BV   7.375% 1/17/2027
Ball Corp.   2.875% 8/15/2030
Ally Financial Inc.   3.875% 5/21/2024
CBL & Associates LP   5.25% 12/1/2023
Petrobras Global Finance BV   8.75% 5/23/2026
Petrobras Global Finance BV   6.85% 6/5/2115
Teva Pharmaceuticals Fin BV   6.75% 3/1/2028
Pacific Gas & Electric Co.   4.95% 7/1/2050
Howmet Aerospace Inc.   6.875% 5/1/2025
Vale Overseas LTD   6.25% 8/10/2026
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.04% -0.33% 2.18% 7.24% 5.06% 8.64%
Mining 0.03% -0.84% 4.41% 21.86% -10.77% -6.08%
Construction 0.01% -0.18% 1.23% 8.14% 2.28% 6.19%
Manufacturing -0.06% -0.61% 2.20% 10.35% 1.32% 6.08%
Transportion, Communication, Electric/Gas 0.02% -0.79% 1.43% 6.90% 3.25% 6.44%
Wholesale -0.02% -0.13% 2.48% 8.66% 2.51% 6.74%
Retail -0.07% -0.26% 2.94% 11.16% 0.14% 4.14%
Finance, Insurance, Real-Estate -0.01% -0.30% 2.58% 10.52% 0.92% 4.78%
Services -0.01% -0.32% 2.71% 9.08% 1.35% 6.34%
Public Administration 0.11% -0.07% 3.96% 11.86% 5.81% 9.21%
Energy -0.03% -0.83% 4.22% 19.77% -9.21% -4.68%
 
Total returns (non-annualized) by rating, market weighted.

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

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

3. HAT Hldg I LLC Hat Hldg II LLC (USD) 3.75% 9/15/2030 144A (08/18/2020): 375MM Senior Unsecured Notes, Price at Issuance 99, Yielding 3.87%.

4. HAT Hldg I LLC Hat Hldg II LLC (USD) 3.75% 9/15/2030 Reg S (08/18/2020): 375MM Senior Unsecured Notes, Price at Issuance 99, Yielding 3.87%.

5. ON Semiconductor Corp. (USD) 3.875% 9/1/2028 144A (08/18/2020): 700MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.88%.

6. iStar Inc. (USD) 5.5% 2/15/2026 (08/18/2020): 400MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.5%.

7. ON Semiconductor Corp. (USD) 3.875% 9/1/2028 Reg S (08/18/2020): 700MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.88%.

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. Pike Corp.: $336MM TLB (Ba3/BB-)

5. MAG Aerospace: $290.7MM TL (B3/B)

6. CJ Foods Inc.: $285MM TLB

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

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

9. MAG Aerospace: $290.7MM TL (B3/B)

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

Additional Commentary

NEW ISSUANCE WATCH:  HAT Hldg I LLC Hat Hldg II issued 375 MM in notes.
Top Widening Loans Top Narrowing Loans
PDC Brands (USD) TLB L+475 06/29/2024
API Technologies Corp. (USD) TL L+425 05/09/2026
Lightstone Holdco LLC (USD) TLB L+375 01/30/2024
LogMeIn Inc. (USD) TLB L+475 08/14/2027
Web.com Group Inc. (USD) TL2 L+775 09/17/2026
Fleetpride Corp. (USD) TL L+450 12/19/2025
Tacala LLC (USD) TLB L+350 02/05/2027
American Tire Distributors Inc. (USD) TL DIP PIK L+600 09/01/2023
Wynn Resorts LTD. (USD) TL L+170 07/24/2025
Kindercare Education LLC (USD) TL L+825 08/16/2025

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 16 bp (basis points), as of 08/19/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
August 19, 2020
Bond Markets

DOLLAR POPPED AND MARKETS WERE DOWN TODAY AS THE FED TAKES A WAIT AND SEE ATTITUDE AND KEPT RATES UNCHANGED. GOLD, SILVER, BITCOIN AND OIL WERE ALL DOWN DUE TO THE POP IN THE DOLLAR.  10 Year Treasury notes were down 1.4 bps. S&P -0.44%, Dow -0.31%, NASDAQ -0.57%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 22.5 MILLION+ CASES AND 787000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 5.7 MILLION+ CASES AND 176000+ 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
+   Dow Chemical Co. 3.6% 11/15/2050 +1.5%
  Santander UK Group Hldg PLC VAR% 8/21/2026 +0.1%
  General Motors Financial Co. Inc. 1.7% 8/18/2023 +0.2%
  Intl Business Machines Corp. 1.95% 5/15/2030 +1.0%
  Goldman Sachs Group Inc. FLT% 4/26/2022 +0.0%
–   Oracle Corp. 3.6% 4/1/2050 -0.1%
  Alphabet Inc. 2.25% 8/15/2060 -0.1%
  Biogen Inc. 3.15% 5/1/2050 -1.8%
  Anthem Inc. 3.125% 5/15/2050 -0.1%
  Dow Chemical Co. 2.1% 11/15/2030 -0.4%
Dow Chemical Co.   3.6% 11/15/2050
Oracle Corp.   3.6% 4/1/2050
Alphabet Inc.   2.25% 8/15/2060
Biogen Inc.   3.15% 5/1/2050
Santander UK Group Hldg PLC   VAR% 8/21/2026
Cummins Inc.   1.5% 9/1/2030
Anthem Inc.   3.125% 5/15/2050
JPMorgan Chase & Co.   VAR% 4/22/2051
Regeneron Pharmaceuticals Inc.   2.8% 9/15/2050
Alphabet Inc.   0.45% 8/15/2025
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.16% -0.74% 1.48% 10.20% 5.36% 6.40%
Construction 0.06% -0.55% 1.10% 7.60% 5.25% 5.26%
Manufacturing 0.15% -1.01% 0.23% 5.48% 6.99% 7.63%
Transportion, Communication, Electric/Gas 0.18% -1.34% 0.02% 7.02% 8.67% 9.02%
Wholesale 0.11% -0.68% 0.84% 6.99% 6.37% 8.90%
Retail 0.20% -1.39% -0.48% 5.52% 8.26% 9.57%
Finance, Insurance, Real-Estate 0.12% -0.47% 0.53% 5.12% 6.08% 7.02%
Services 0.11% -0.90% 0.14% 5.74% 6.55% 7.16%
Public Administration 0.15% -0.04% 0.07% 0.55% 4.43% 3.90%
Energy 0.20% -0.85% 1.31% 10.25% 4.76% 6.02%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Roper Technologies Inc. (USD) 1.4% 9/15/2027 (08/18/2020): 700MM Senior Unsecured Notes, Price at Issuance 99.86, Yielding 1.42%.

2. Roper Technologies Inc. (USD) 1.75% 2/15/2031 (08/18/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.839, Yielding 1.77%.

3. Community Health Network, Inc. (USD) 3.099% 5/1/2050 (08/18/2020): 449MM Unsecured Notes, Price at Issuance 100, Yielding 3.1%.

4. Roper Technologies Inc. (USD) 0.45% 8/15/2022 (08/18/2020): 300MM Senior Unsecured Notes, Price at Issuance 99.913, Yielding .49%.

5. Roper Technologies Inc. (USD) 1% 9/15/2025 (08/18/2020): 700MM Senior Unsecured Notes, Price at Issuance 99.868, Yielding 1.03%.

6. Athene Global Funding (USD) 2.45% 8/20/2027 (08/18/2020): 550MM Secured Notes, Price at Issuance 99.866, Yielding 2.47%.

7. Retail Properties of America (USD) 4.75% 9/15/2030 (08/18/2020): 400MM Senior Unsecured Notes, Price at Issuance 98.684, Yielding 4.92%.

8. Globe Life Inc. (USD) 2.15% 8/15/2030 (08/18/2020): 350MM Senior Unsecured Notes, Price at Issuance 99.822, Yielding 2.17%.

9. KKR Group Finance Co. VII LLC (USD) 3.5% 8/25/2050 144A (08/18/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.1, Yielding 3.55%.

10. Athene Global Funding (USD) 2.45% 8/20/2027 Reg S (08/18/2020): 550MM Secured Notes, Price at Issuance 99.866, Yielding 2.47%.

Additional Commentary

NEW ISSUANCE WATCH:  Roper Technologies Inc. issued 2700 MM in notes.
Top Widening Loans Top Narrowing Loans
PDC Brands (USD) TLB L+475 06/29/2024
API Technologies Corp. (USD) TL L+425 05/09/2026
Lightstone Holdco LLC (USD) TLB L+375 01/30/2024
LogMeIn Inc. (USD) TLB L+475 08/14/2027
Web.com Group Inc. (USD) TL2 L+775 09/17/2026
Fleetpride Corp. (USD) TL L+450 12/19/2025
Tacala LLC (USD) TLB L+350 02/05/2027
American Tire Distributors Inc. (USD) TL DIP PIK L+600 09/01/2023
Wynn Resorts LTD. (USD) TL L+170 07/24/2025
Kindercare Education LLC (USD) TL L+825 08/16/2025

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 16 bp (basis points), as of 08/19/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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