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North American Bond Research – August 5, 2020

Posted on August 5, 2020
HIGH YIELD BOND RESEARCH
August 5, 2020
Bond Markets

MARKETS UP ON VACCINE NEWS. JOHNSON AND JOHNSON, AS WELL AS MODERNA, ARE BOTH MAKING SIGNIFICANT PROGRESS TOWARDS A VACCINE. 10 Year Treasury notes were up 2.8 bps. S&P +0.55%, Dow +1.15%, NASDAQ +0.45%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 18.9 MILLION+ CASES AND 708000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 5 MILLION+ CASES AND 161000+ 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
+   Alphabet Inc. 2.05% 8/15/2050 +0.2%
  Walt Disney Co. 3.6% 1/13/2051 +1.7%
  General Motors Financial Co. Inc. 2.75% 6/20/2025 +0.7%
  Boeing Co. 5.805% 5/1/2050 +0.9%
  Boeing Co. 5.15% 5/1/2030 +0.6%
–   Alphabet Inc. 2.25% 8/15/2060 -0.5%
  Alphabet Inc. 0.8% 8/15/2027 -0.2%
  Viacom Inc. 4.2% 5/19/2032 -0.1%
  AT&T Inc. 3.3% 2/1/2052 -0.4%
  NextEra Energy Capital Holding Inc. 2.25% 6/1/2030 -0.4%
Alphabet Inc.   2.05% 8/15/2050
Alphabet Inc.   2.25% 8/15/2060
Walt Disney Co.   3.6% 1/13/2051
General Motors Financial Co. Inc.   2.75% 6/20/2025
Boeing Co.   5.805% 5/1/2050
Boeing Co.   5.15% 5/1/2030
Alphabet Inc.   0.8% 8/15/2027
Bank of America Corp.   1.898% 7/23/2031
Alphabet Inc.   0.45% 8/15/2025
Viacom Inc.   4.2% 5/19/2032
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.00% 0.42% 3.90% 7.42% 4.76% 8.77%
Mining 0.00% 1.15% 5.76% 30.89% -11.38% -7.25%
Construction -0.03% 0.82% 3.70% 10.56% 3.05% 7.85%
Manufacturing 0.02% 0.77% 4.11% 11.58% 1.96% 7.17%
Transportion, Communication, Electric/Gas 0.01% 0.53% 3.03% 8.55% 3.73% 7.33%
Wholesale -0.01% 0.83% 3.66% 10.61% 2.65% 6.60%
Retail 0.04% 1.10% 4.77% 11.46% 0.35% 4.28%
Finance, Insurance, Real-Estate 0.04% 0.64% 3.16% 10.13% 1.18% 5.39%
Services -0.01% 0.67% 4.07% 9.90% 0.92% 5.71%
Public Administration 0.12% 1.01% 2.85% 10.55% 4.34% 7.95%
Energy 0.07% 1.14% 5.92% 27.05% -9.77% -5.45%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Morgan Stanley Finance LLC (USD) 0% 8/11/2060 (08/04/2020): 50MM Senior Unsecured Notes, Price at Issuance 100, Yielding 0%.

2. New York Life Global Funding (USD) 1.2% 8/7/2030 144A (08/04/2020): 600MM Secured Notes, Price at Issuance 99.831, Yielding 1.22%.

3. AutoZone Inc. (USD) 1.65% 1/15/2031 (08/04/2020): 600MM Senior Unsecured Notes, Price at Issuance 99.696, Yielding 1.68%.

4. PACCAR Financial Corp. (USD) 0.35% 8/11/2023 (08/04/2020): 450MM Senior Unsecured Notes, Price at Issuance 99.869, Yielding .39%.

5. Moody’s Corp. (USD) 2.55% 8/18/2060 (08/04/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.155, Yielding 2.58%.

6. Boardwalk Pipelines LLC (USD) 3.4% 2/15/2031 (08/04/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.886, Yielding 3.41%.

7. Public Service Electric & Gas Co. (USD) 2.05% 8/1/2050 (08/04/2020): 375MM Secured Notes, Price at Issuance 99.201, Yielding 2.09%.

Additional Commentary

NEW ISSUANCE WATCH: AutoZone Inc. issued 600 MM in notes.
Top Widening Loans Top Narrowing Loans
CPV Shore LLC (USD) TLB L+375 12/27/2025
Indivior Finance LLC (USD) TLB L+450 12/14/2022
Pitney Bowes Inc. (USD) TLA L+175 11/01/2024
API Technologies Corp. (USD) TL L+425 05/09/2026
Exclusive Group (EUR) TLB E+400 06/06/2025
TCW Group (USD) TLB L+175 12/27/2024
Tacala LLC (USD) TLB L+350 02/05/2027
Vertafore Inc. (USD) TL1 L+325 06/30/2023
Kiwi Holding IV Sarl (GBP) TLB L+400 07/27/2024
CH Guenther & Son Inc. (USD) TLB L+275 03/23/2025

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 08/05/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
August 5, 2020
Bond Markets

MARKETS UP ON VACCINE NEWS. JOHNSON AND JOHNSON, AS WELL AS MODERNA, ARE BOTH MAKING SIGNIFICANT PROGRESS TOWARDS A VACCINE. 10 Year Treasury notes were up 2.8 bps. S&P +0.55%, Dow +1.15%, NASDAQ +0.45%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 18.9 MILLION+ CASES AND 708000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 5 MILLION+ CASES AND 161000+ 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. 2.05% 8/15/2050 +0.2%
  Walt Disney Co. 3.6% 1/13/2051 +1.7%
  General Motors Financial Co. Inc. 2.75% 6/20/2025 +0.7%
  Boeing Co. 5.805% 5/1/2050 +0.9%
  Boeing Co. 5.15% 5/1/2030 +0.6%
–   Alphabet Inc. 2.25% 8/15/2060 -0.5%
  Alphabet Inc. 0.8% 8/15/2027 -0.2%
  Viacom Inc. 4.2% 5/19/2032 -0.1%
  AT&T Inc. 3.3% 2/1/2052 -0.4%
  NextEra Energy Capital Holding Inc. 2.25% 6/1/2030 -0.4%
Alphabet Inc.   2.05% 8/15/2050
Alphabet Inc.   2.25% 8/15/2060
Walt Disney Co.   3.6% 1/13/2051
General Motors Financial Co. Inc.   2.75% 6/20/2025
Boeing Co.   5.805% 5/1/2050
Boeing Co.   5.15% 5/1/2030
Alphabet Inc.   0.8% 8/15/2027
Bank of America Corp.   1.898% 7/23/2031
Alphabet Inc.   0.45% 8/15/2025
Viacom Inc.   4.2% 5/19/2032
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.22% 0.21% 3.70% 12.47% 6.36% 9.12%
Construction 0.10% 0.30% 2.94% 7.71% 5.36% 6.78%
Manufacturing 0.24% 0.40% 2.73% 6.66% 8.30% 11.06%
Transportion, Communication, Electric/Gas 0.30% 0.30% 3.64% 7.57% 10.26% 13.38%
Wholesale 0.17% 0.52% 2.58% 7.76% 7.03% 11.34%
Retail 0.26% 0.27% 2.69% 6.63% 9.80% 13.64%
Finance, Insurance, Real-Estate 0.22% 0.32% 1.90% 5.46% 6.55% 9.02%
Services 0.18% 0.25% 2.54% 6.07% 7.75% 10.63%
Public Administration 0.27% 0.13% 0.31% 0.82% 4.67% 5.38%
Energy 0.24% 0.19% 3.20% 12.08% 5.27% 8.42%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Morgan Stanley Finance LLC (USD) 0% 8/11/2060 (08/04/2020): 50MM Senior Unsecured Notes, Price at Issuance 100, Yielding 0%.

2. New York Life Global Funding (USD) 1.2% 8/7/2030 144A (08/04/2020): 600MM Secured Notes, Price at Issuance 99.831, Yielding 1.22%.

3. AutoZone Inc. (USD) 1.65% 1/15/2031 (08/04/2020): 600MM Senior Unsecured Notes, Price at Issuance 99.696, Yielding 1.68%.

4. PACCAR Financial Corp. (USD) 0.35% 8/11/2023 (08/04/2020): 450MM Senior Unsecured Notes, Price at Issuance 99.869, Yielding .39%.

5. Moody’s Corp. (USD) 2.55% 8/18/2060 (08/04/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.155, Yielding 2.58%.

6. Boardwalk Pipelines LLC (USD) 3.4% 2/15/2031 (08/04/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.886, Yielding 3.41%.

7. Public Service Electric & Gas Co. (USD) 2.05% 8/1/2050 (08/04/2020): 375MM Secured Notes, Price at Issuance 99.201, Yielding 2.09%.

8. Block Financial LLC (USD) 3.875% 8/15/2030 (08/04/2020): 650MM Senior Unsecured Notes, Price at Issuance 99.687, Yielding 3.91%.

9. Texas Health Resources (USD) 2.328% 11/15/2050 (08/04/2020): 300MM Senior Unsecured Notes, Price at Issuance 100.

10. New York Life Global Funding (USD) 1.2% 8/7/2030 Reg S (08/04/2020): 600MM Secured Notes, Price at Issuance 99.831, Yielding 1.22%.

Additional Commentary

NEW ISSUANCE WATCH: AutoZone Inc. issued 600 MM in notes.
Top Widening Loans Top Narrowing Loans
CPV Shore LLC (USD) TLB L+375 12/27/2025
Indivior Finance LLC (USD) TLB L+450 12/14/2022
Pitney Bowes Inc. (USD) TLA L+175 11/01/2024
API Technologies Corp. (USD) TL L+425 05/09/2026
Exclusive Group (EUR) TLB E+400 06/06/2025
TCW Group (USD) TLB L+175 12/27/2024
Tacala LLC (USD) TLB L+350 02/05/2027
Vertafore Inc. (USD) TL1 L+325 06/30/2023
Kiwi Holding IV Sarl (GBP) TLB L+400 07/27/2024
CH Guenther & Son Inc. (USD) TLB L+275 03/23/2025

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 16bp (basis points), as of 08/05/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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