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North American Bond Research – August 31, 2020

Posted on August 31, 2020
HIGH YIELD BOND RESEARCH
August 31, 2020
Bond Markets

US MARKETS WERE MIXED TO UP. EUROPEAN MARKETS WERE DOWN AGAIN AS THE DOLLAR WEAKENED AGAINST THE EURO IN LIGHT OF THE FED’S LOOSENING OF MONETARY POLICY TOWARDS INFLATION. 10 Year Treasury notes were down 1.2 bps. S&P +0.67%, Dow -0.22%, NASDAQ +0.68%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 25.5 MILLION+ CASES AND 852000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 6.2 MILLION+ CASES AND 188000+ 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
+   Pacific Gas & Electric Co. 4.55% 7/1/2030 +0.9%
  Petrobras Global Finance BV 7.375% 1/17/2027 +0.4%
  Equinix Inc. 5.375% 5/15/2027 +0.7%
  Micron Technology Inc. 4.663% 2/15/2030 +1.0%
  Pacific Gas & Electric Co. 3.5% 6/15/2025 +0.4%
–   United Rentals North AM 3.875% 2/15/2031 -0.1%
  General Motors Co. 4.875% 10/2/2023 -0.4%
  Continental Res Inc. 4.5% 4/15/2023 -0.2%
  Washington Prime Group LP 5.95% 8/15/2024 -0.6%
  Occidental Petroleum Corp. 5.875% 9/1/2025 -0.5%
Pacific Gas & Electric Co.   4.55% 7/1/2030
United Rentals North AM   3.875% 2/15/2031
Petrobras Global Finance BV   7.375% 1/17/2027
Equinix Inc.   5.375% 5/15/2027
Micron Technology Inc.   4.663% 2/15/2030
General Motors Co.   4.875% 10/2/2023
Pacific Gas & Electric Co.   3.5% 6/15/2025
Continental Res Inc.   4.5% 4/15/2023
ArcelorMittal SA   4.25% 7/16/2029
Ball Corp.   2.875% 8/15/2030
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.02% 0.47% 0.98% 5.32% 5.48% 9.22%
Mining 0.08% 0.61% 2.19% 13.26% -9.99% -5.93%
Construction -0.02% 0.40% 1.48% 7.24% 4.68% 7.63%
Manufacturing -0.02% 0.52% 1.22% 7.22% 2.02% 6.19%
Transportion, Communication, Electric/Gas 0.02% 0.33% 0.48% 4.30% 3.83% 6.19%
Wholesale -0.03% -1.00% -0.31% 4.31% 0.20% 3.46%
Retail 0.02% 0.69% 2.32% 9.25% 1.23% 4.82%
Finance, Insurance, Real-Estate 0.03% 0.38% 1.83% 8.38% 1.89% 4.87%
Services -0.02% 0.66% 1.86% 6.20% 2.03% 5.87%
Public Administration 0.02% 0.22% 2.82% 9.12% 6.20% 8.99%
Energy 0.09% 0.60% 1.99% 11.45% -8.46% -4.68%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 08/31/2020)
1. Avianca : $1.3B DIP DD TLB

2. MAG Aerospace: $290.7MM TL (B3/B)

3. CJ Foods Inc.: $285MM TLB

4. Metronet : $100MM TLB

5. Avianca : $1.3B DIP DD TLB

6. MAG Aerospace: $290.7MM TL (B3/B)

7. CJ Foods Inc.: $285MM TLB

8. Avianca : $1.3B DIP DD TLB

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

10. MAG Aerospace: $290.7MM TL (B3/B)

Additional Commentary

NEW ISSUANCE WATCH: No New Issues.
Top Widening Loans Top Narrowing Loans
Aretec Group Inc (USD) TL L+425 10/02/2025
Casper Bidco (EUR) TL E+850 07/30/2027
EG Group (USD) TLB L+400 02/06/2025
BioClinica Inc. (USD) TL L+825 10/06/2024
LSF9 Atlantis Holdings LLC (USD) TL L+600 05/01/2023
NCL Corp. LTD (USD) TLA L+150 01/02/2024
Deoleo SA (EUR) TL2 E+675 06/12/2022
Globalfoundries Inc. (USD) TLB L+400 06/05/2026
Tenneco Inc. (USD) RC L+175 10/01/2023
Tenneco Inc. (USD) TLA L+175 10/01/2023

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 15 bp (basis points), as of 08/28/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
August 31, 2020
Bond Markets

US MARKETS WERE MIXED TO UP. EUROPEAN MARKETS WERE DOWN AGAIN AS THE DOLLAR WEAKENED AGAINST THE EURO IN LIGHT OF THE FED’S LOOSENING OF MONETARY POLICY TOWARDS INFLATION. 10 Year Treasury notes were down 1.2 bps. S&P +0.67%, Dow -0.22%, NASDAQ +0.68%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 25.5 MILLION+ CASES AND 852000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 6.2 MILLION+ CASES AND 188000+ 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
+   Alphabet Inc. 2.25% 8/15/2060 +0.7%
  Johnson & Johnson 2.25% 9/1/2050 +1.9%
  Apple Inc. 2.55% 8/20/2060 +1.4%
  Apple Inc. 2.4% 8/20/2050 +2.2%
  Alphabet Inc. 2.05% 8/15/2050 +0.7%
–   Host Hotels & Resorts LP 3.5% 9/15/2030 -0.4%
  JP Morgan Chase & Co. 4.35% 8/15/2021 -0.1%
  Microsoft Corp. 1.55% 8/8/2021 (1) -0.2%
  Alphabet Inc. 1.1% 8/15/2030 -0.1%
  Westpac Banking Corp. 2% 8/19/2021 -0.0%
Alphabet Inc.   2.25% 8/15/2060
Host Hotels & Resorts LP   3.5% 9/15/2030
Johnson & Johnson   2.25% 9/1/2050
JP Morgan Chase & Co.   4.35% 8/15/2021
Microsoft Corp.   1.55% 8/8/2021 (1)
Apple Inc.   2.55% 8/20/2060
Apple Inc.   2.4% 8/20/2050
Alphabet Inc.   1.1% 8/15/2030
Alphabet Inc.   2.05% 8/15/2050
MPLX LP   1.75% 3/1/2026
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.02% -0.36% -0.43% 6.27% 5.66% 5.93%
Construction 0.04% -0.49% -0.54% 4.01% 4.85% 4.16%
Manufacturing -0.00% -0.42% -0.81% 3.60% 6.59% 6.57%
Transportion, Communication, Electric/Gas -0.07% -0.76% -1.69% 4.17% 8.02% 7.57%
Wholesale 0.04% -0.24% -0.12% 5.01% 5.99% 7.81%
Retail 0.01% -0.61% -1.58% 3.04% 7.43% 7.93%
Finance, Insurance, Real-Estate -0.01% -0.24% -0.19% 3.55% 5.78% 6.31%
Services -0.01% -0.38% -0.79% 3.89% 6.28% 6.28%
Public Administration -0.04% -0.15% -0.11% 0.48% 4.63% 3.89%
Energy -0.02% -0.39% -0.57% 5.37% 4.54% 5.09%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]

(None Current 08/31/2020)
Additional Commentary

NEW ISSUANCE WATCH: No New Issues.
Top Widening Loans Top Narrowing Loans
Aretec Group Inc (USD) TL L+425 10/02/2025
Casper Bidco (EUR) TL E+850 07/30/2027
EG Group (USD) TLB L+400 02/06/2025
BioClinica Inc. (USD) TL L+825 10/06/2024
LSF9 Atlantis Holdings LLC (USD) TL L+600 05/01/2023
NCL Corp. LTD (USD) TLA L+150 01/02/2024
Deoleo SA (EUR) TL2 E+675 06/12/2022
Globalfoundries Inc. (USD) TLB L+400 06/05/2026
Tenneco Inc. (USD) RC L+175 10/01/2023
Tenneco Inc. (USD) TLA L+175 10/01/2023

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 15 bp (basis points), as of 08/31/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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