MARKETS WERE MIXED AS DUALING NEWS BUFFETED THE MARKETS. UNEMPLOYMENT RATE FELL TO 10.2% AS 1.8 MILLION JOBS WERE ADDED IN JULY, BUT COLLATERAL DAMAGE FROM THE COVID19 VIRUS CONTINUES TO BUILD UP IN THE MARKET. TENSIONS WITH CHINA IS ALSO A NEGATIVE. 10 Year Treasury notes were down 2.6 bps. S&P +0.06%, Dow +0.17%, NASDAQ -0.87%.
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Market Summaries
North American Bond Research – August 7, 2020
Posted on August 7, 2020|
HIGH YIELD BOND RESEARCH
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August 7, 2020
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Bond Markets
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 19.5 MILLION+ CASES AND 721000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 5.1 MILLION+ CASES AND 164000+ 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 | ||||||||||||||||||||||||||||||
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Pacific Gas & Electric Co. 4.55% 7/1/2030 Pacific Gas & Electric Co. 4.95% 7/1/2050 T-Mobile USA Inc. 3.875% 4/15/2030 144A Ford Motor Co. 8.5% 4/21/2023 T-Mobile USA Inc. 3.75% 4/15/2027 144A Extraction Oil & Gas LLC 5.625% 2/1/2026 Reg S ADT Corp. 6.25% 10/15/2021 Transocean Sedco Forex Inc. 7.5% 4/15/2031 United Rentals North AM 3.875% 2/15/2031 American Axle & Manufacturing Inc. 6.5% 4/1/2027 |
| Industry Returns Tracker | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| New Issues | Forward Calendar |
|---|---|
| 1. Triumph Group Inc. (USD) 8.875% 6/1/2024 144A (08/05/2020): 700MM First Lien Notes, Price at Issuance 100, Yielding 8.88%.
2. Triumph Group Inc. (USD) 8.875% 6/1/2024 (08/05/2020): 700MM First Lien Notes, Price at Issuance 100, Yielding 8.88%. 3. Triumph Group Inc. (USD) 8.875% 6/1/2024 Reg S (08/05/2020): 700MM First Lien Notes, Price at Issuance 100, Yielding 8.88%. 4. Harvest Midstream I LP (USD) 7.5% 9/1/2028 144A (08/05/2020): 600MM Senior Unsecured Notes, Price at Issuance 100, Yielding 7.5%. 5. Howard Hughes Corp. (USD) 5.375% 8/1/2028 144A (08/05/2020): 750MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.38%. 6. Harvest Midstream I LP (USD) 7.5% 9/1/2028 Reg S (08/05/2020): 600MM Senior Unsecured Notes, Price at Issuance 100, Yielding 7.5%. 7. Howard Hughes Corp. (USD) 5.375% 8/1/2028 Reg S (08/05/2020): 750MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.38%. 8. STL Holding Company LLC (USD) 7.5% 2/15/2026 Reg S (08/05/2020): 225MM Senior Unsecured Notes. 9. STL Holding Company LLC (USD) 7.5% 2/15/2026 144A (08/05/2020): 225MM Senior Unsecured Notes. 10. WMG Acquisition Corp. (USD) 3% 2/15/2031 144A (08/06/2020): 550MM Secured Notes, Price at Issuance 100, Yielding 3%. |
1. CJ Foods Inc.: $285MM TLB
2. Logmein Inc.: $2.45B credit facilities: $1.95B first lien TL; $500MM second-lien TL 3. MAG Aerospace: $290.7MM TL (B3/B) 4. RSA: $1.425B credit facilities: $75MM revolver; $1B TL; $350MM TL 5. Smart Start Inc.: $350MM TLB 6. Tutor Perini: $375MM TLB (Ba3/BB-/BB+) 7. Concord : $1.05B credit facilities (B1/B+): $450MM revolver; $600MM TLB 8. RSA: $1.425B credit facilities: $75MM revolver; $1B TL; $350MM TL 9. MAG Aerospace: $290.7MM TL (B3/B) 10. Logmein Inc.: $3.55B credit facilities: $250MM Revolver; $2.7B first lien TL; $600MM second-lien TL |
Additional Commentary
NEW ISSUANCE WATCH: Triumph Group Inc. issued 600 MM in notes.
| Top Widening Loans | Top Narrowing Loans |
| Packaging Coordinators Inc. (USD) TL L+400 08/22/2023 Arvos Holding (EUR) TLB2 E+450 08/29/2021 Openlink Intl. Inc. (EUR) TLB E+450 03/02/2025 American Tire Distributors Inc. (USD) TL DIP PIK L+600 09/01/2023 CPV Shore LLC (USD) TLB L+375 12/27/2025 |
MMM Holdings Inc. (USD) RC 11/01/2024 Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023 Jazz Securities LTD (USD) TLA 06/07/2023 Nets Hldgs AS (NOK) TLB1N L+400 02/06/2025 Carrols Restaurant Group (USD) TLB1 L+625 04/30/2026 |
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 16 bp (basis points), as of 08/07/2020
- Net negative capital flows into high-yield ETFs & mutual funds
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INVESTMENT GRADE BOND RESEARCH
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August 7, 2020
|
Bond Markets
MARKETS WERE MIXED AS DUALING NEWS BUFFETED THE MARKETS. UNEMPLOYMENT RATE FELL TO 10.2% AS 1.8 MILLION JOBS WERE ADDED IN JULY, BUT COLLATERAL DAMAGE FROM THE COVID19 VIRUS CONTINUES TO BUILD UP IN THE MARKET. TENSIONS WITH CHINA IS ALSO A NEGATIVE. 10 Year Treasury notes were down 2.6 bps. S&P +0.06%, Dow +0.17%, NASDAQ -0.87%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 19.5 MILLION+ CASES AND 721000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 5.1 MILLION+ CASES AND 164000+ 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 | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
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Oracle Corp. 3.85% 4/1/2060 Block Financial LLC 3.875% 8/15/2030 Qualcomm Inc. 2.9% 5/20/2024 Boeing Co. 5.15% 5/1/2030 Boeing Co. 5.04% 5/1/2027 Boeing Co. 5.93% 5/1/2060 Qualcomm Inc. 3.45% 5/20/2025 Takeda Pharmaceutical Co. LTD 2.05% 3/31/2030 Banco Santander SA 3.49% 5/28/2030 Pacific Gas & Electric Co. 3.15% 1/1/2026 |
| Industry Returns Tracker | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| New Issues | New Issues [Continued] |
|---|---|
| 1. Wildlife Conservation Society (USD) 3.414% 8/1/2050 (08/06/2020): 165MM Unsecured Notes, Price at Issuance 100, Yielding 3.41%.
2. Pioneer Natural Resources Co. (USD) 1.9% 8/15/2030 (08/06/2020): 1100MM Senior Unsecured Notes, Price at Issuance 99.205, Yielding 1.99%. 3. ServiceNow Inc. (USD) 1.4% 9/1/2030 (08/06/2020): 1500MM Senior Unsecured Notes, Price at Issuance 99.626, Yielding 1.44%. 4. Prologis LP (USD) 1.25% 10/15/2030 (08/06/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.62, Yielding 1.29%. 5. Prologis LP (USD) 2.125% 10/15/2050 (08/06/2020): 500MM Senior Unsecured Notes, Price at Issuance 98.438, Yielding 2.2%. 6. Baycom Corp. (USD) VAR% 9/15/2030 (08/06/2020): 65MM Subordinated Notes, Price at Issuance 100. 7. Regeneron Pharmaceuticals Inc. (USD) 1.75% 9/15/2030 (08/07/2020): 1250MM Senior Unsecured Notes, Price at Issuance 99.898, Yielding 1.76%. 8. Regeneron Pharmaceuticals Inc. (USD) 2.8% 9/15/2050 (08/07/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.715, Yielding 2.81%. 9. Standard Industries Inc. (USD) 3.375% 1/15/2031 144A (08/07/2020): 1100MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.38%. 10. Standard Industries Inc. (USD) 3.375% 1/15/2031 Reg S (08/07/2020): 1100MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.38%. |
Additional Commentary
NEW ISSUANCE WATCH: Activision Blizzard Inc. issued 2000 MM in notes.
| Top Widening Loans | Top Narrowing Loans |
| Whiting Oil and Gas Corp. (USD) RC L+200 04/12/2023 Global Ship Lease Inc. (USD) TL 09/19/2024 NCL Corp. LTD (USD) TLA L+150 01/02/2024 Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027 Eagle 4 Limited (USD) TL L+775 06/14/2027 |
Conserve Merger Sub Inc. (USD) TL2 L+725 08/08/2026 Grosvenor Capital Mgmt Hldg LLP (USD) TLB L+275 03/29/2025 Carrols Restaurant Group (USD) TLB1 L+625 04/30/2026 Hyland Software Inc. (USD) TL2 L+700 07/10/2025 Apcoa Standard Parking Inc. (EUR) TLB E+325 03/20/2024 |
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 08/07/2020
- Net positive capital flows into high-yield ETFs & mutual funds
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