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North American Bond Research – August 3, 2020

Posted on August 3, 2020
HIGH YIELD BOND RESEARCH
August 3, 2020
Bond Markets

MARKETS WERE UP AS TALKS OF ADDITIONAL STIMULUS, ADVANCEMENT ON VACCINE, AND SOME BETTER THEN EXPECTED EARNINGS REPORTED. 10 Year Treasury notes were up 2.7 bps. S&P +0.72%, Dow +0.89%, NASDAQ +1.47%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 18.4 MILLION+ CASES AND 696000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 4.8 MILLION+ CASES AND 159000+ 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
+   Vale Overseas LTD 3.75% 7/8/2030 +0.2%
  Delta Airlines Inc. 3.204% 4/25/2024 +0.1%
  Delta Airlines Inc. 2.6% 12/4/2020 +0.1%
  T-Mobile USA Inc. 3.5% 4/15/2025 144A +0.2%
  Ford Motor Co. 4.75% 1/15/2043 +0.4%
–   Pacific Gas & Electric Co. 4.55% 7/1/2030 -0.2%
  Ford Motor Co. 4.346% 12/8/2026 -0.8%
  Pacific Gas & Electric Co. 4.95% 7/1/2050 -2.1%
  EPR Properties 5.25% 7/15/2023 -0.2%
  Equinix Inc. 5.375% 5/15/2027 -0.0%
Pacific Gas & Electric Co.   4.55% 7/1/2030
Ford Motor Co.   4.346% 12/8/2026
Vale Overseas LTD   3.75% 7/8/2030
Pacific Gas & Electric Co.   4.95% 7/1/2050
United Rentals North AM   3.875% 2/15/2031
Delta Airlines Inc.   3.204% 4/25/2024
Delta Airlines Inc.   2.6% 12/4/2020
T-Mobile USA Inc.   3.5% 4/15/2025 144A
Ford Motor Co.   4.75% 1/15/2043
EPR Properties   5.25% 7/15/2023
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.06% 0.38% 3.78% 7.06% 4.57% 8.78%
Mining 0.11% 0.77% 4.82% 27.10% -12.67% -7.40%
Construction 0.11% 1.02% 3.75% 10.88% 3.25% 7.81%
Manufacturing 0.16% 0.72% 4.18% 11.07% 1.46% 6.60%
Transportion, Communication, Electric/Gas 0.06% 0.42% 3.17% 8.11% 3.65% 7.23%
Wholesale 0.03% 0.73% 3.12% 11.39% 1.29% 5.02%
Retail 0.10% 1.08% 4.82% 11.29% 0.55% 4.32%
Finance, Insurance, Real-Estate 0.08% 0.49% 3.19% 9.92% 0.69% 4.70%
Services 0.05% 0.44% 3.91% 9.36% 0.62% 5.42%
Public Administration 0.21% 0.72% 2.66% 9.88% 3.86% 7.63%
Energy 0.24% 1.12% 5.73% 26.36% -9.76% -5.66%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 08/03/2020)
1. Concord : $850MM credit facilities (B1/BB-): $450MM revolver; $400MM TLB

2. CJ Foods Inc.: $285MM TLB

3. Huntsworth PLC: $300MM TL

4. Thyssenkrupp Elevator: $2.875B seven-year first-lien term loan B (B1/B/B+); ¬1.1015B seven-year first-lien first-lien term loan B (B1/B/B+)

5. MAG Aerospace: $290.7MM TL (B3/B)

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

7. Logmein Inc.: $3.55B credit facilities: $250MM Revolver; $2.7B first lien TL; $600MM second-lien TL

8. Aldevron LLC: $50MM TL (B1/B)

9. Concord : $850MM credit facilities (B1/BB-): $450MM revolver; $400MM TLB

10. CJ Foods Inc.: $285MM TLB

Additional Commentary

NEW ISSUANCE WATCH: No new issues.
Top Widening Loans Top Narrowing Loans
Lifemiles LTD (USD) TLB L+550 08/17/2022
Authentic Brands Group LLC (USD) TLB L+350 09/29/2024
CPA Global (EUR) TLB E+300 12/04/2020
Conduent Business Services LLC (USD) TLA L+175 12/07/2022
Drilling Info Inc. (USD) TL L+425 07/30/2025
NCL Corp. LTD (USD) TLA L+150 01/02/2024
Mavenir Inc. (USD) TLB L+600 05/08/2025
Koninklijke Ten Cate NV (USD) TLB2 L+325 01/27/2023
Carrols Restaurant Group (USD) TLB1 L+625 04/30/2026
Hamilton Holdco LLC (USD) TLB L+200 01/02/2027

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 08/03/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
August 3, 2020
Bond Markets

MARKETS WERE UP AS TALKS OF ADDITIONAL STIMULUS, ADVANCEMENT ON VACCINE, AND SOME BETTER THEN EXPECTED EARNINGS REPORTED. 10 Year Treasury notes were up 2.7 bps. S&P +0.72%, Dow +0.89%, NASDAQ +1.47%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 18.4 MILLION+ CASES AND 696000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 4.8 MILLION+ CASES AND 159000+ 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
+   Unilever Cap Corp. 3% 3/7/2022 +0.0%
  Nvidia Corp. 3.5% 4/1/2050 +0.3%
  Microsoft Corp. 1.55% 8/8/2021 +0.2%
  AT&T Inc. 2.75% 6/1/2031 +0.4%
  Credit Suisse New York 2.1% 11/12/2021 +0.0%
–   Boeing Co. 4.875% 5/1/2025 -0.5%
  AT&T Inc. 3.1% 2/1/2043 -0.8%
  AT&T Inc. 2.25% 2/1/2032 -0.0%
  Bank of Nova Scotia 2.8% 7/21/2021 -0.0%
  Boeing Co. 5.15% 5/1/2030 -0.1%
Boeing Co.   4.875% 5/1/2025
AT&T Inc.   3.1% 2/1/2043
Unilever Cap Corp.   3% 3/7/2022
AT&T Inc.   2.25% 2/1/2032
Bank of Nova Scotia   2.8% 7/21/2021
Boeing Co.   5.15% 5/1/2030
Boeing Co.   5.805% 5/1/2050
Nvidia Corp.   3.5% 4/1/2050
Pacific Gas & Electric Co.   4.55% 7/1/2030
AT&T Inc.   2.75% 6/1/2031
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.08% 0.19% 3.88% 12.21% 6.33% 9.72%
Construction 0.09% 0.14% 3.07% 7.68% 4.68% 7.15%
Manufacturing 0.13% 0.31% 2.73% 6.14% 8.30% 12.03%
Transportion, Communication, Electric/Gas 0.11% 0.20% 3.73% 7.29% 10.16% 14.34%
Wholesale 0.11% 0.36% 2.17% 6.88% 6.45% 11.10%
Retail 0.08% 0.13% 2.76% 6.29% 9.76% 14.60%
Finance, Insurance, Real-Estate 0.08% 0.22% 1.80% 5.11% 6.28% 9.46%
Services 0.08% 0.22% 2.48% 5.78% 7.42% 10.98%
Public Administration 0.03% 0.11% 0.31% 0.82% 4.65% 5.75%
Energy 0.07% 0.13% 3.44% 11.86% 5.30% 9.12%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]

(None Current 08/03/2020)
Additional Commentary

NEW ISSUANCE WATCH: on 07/31/2020 participants welcome a $400MM new corporate-bond offering by
Highwoods Realty LP .
Top Widening Loans Top Narrowing Loans
Lifemiles LTD (USD) TLB L+550 08/17/2022
Authentic Brands Group LLC (USD) TLB L+350 09/29/2024
CPA Global (EUR) TLB E+300 12/04/2020
Conduent Business Services LLC (USD) TLA L+175 12/07/2022
Drilling Info Inc. (USD) TL L+425 07/30/2025
NCL Corp. LTD (USD) TLA L+150 01/02/2024
Mavenir Inc. (USD) TLB L+600 05/08/2025
Koninklijke Ten Cate NV (USD) TLB2 L+325 01/27/2023
Carrols Restaurant Group (USD) TLB1 L+625 04/30/2026
Hamilton Holdco LLC (USD) TLB L+200 01/02/2027

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 08/03/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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