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North American Bond Research – December 10, 2020

Posted on December 10, 2020
HIGH YIELD BOND RESEARCH
December 10, 2020
Bond Markets

GLOBAL MARKETS WERE MIXED AS COVID IS CONTINUING TO SURGE. STIMULUS TALKS ARE AT A DEADLOCK UNTIL PROBABLY THE GEORGIA SENATE RACE DETERMINES WHO CONTROLS THE SENATE. 10 Year Treasury notes were UP 2.8 bps. S&P -0.13%, Dow -0.23%, NASDAQ +0.54%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 70.6 MILLION+ CASES AND 1.59 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 16 MILLION+ CASES AND 300000+ 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. 4.5% 12/15/2041 +1.3%
  Occidental Petroleum Corp. 5.5% 12/1/2025 +0.9%
  Occidental Petroleum Corp. 6.125% 1/1/2031 +0.9%
  Vale Overseas LTD 6.25% 8/10/2026 +0.1%
  Occidental Petroleum Corp. 5.875% 9/1/2025 +1.5%
–   Vale Overseas LTD 3.75% 7/8/2030 -0.0%
  Pacific Gas & Electric Co. 4.55% 7/1/2030 -0.2%
  US Steel Corp. 6.65% 6/1/2037 -1.9%
  United States STL Corp. New 6.25% 3/15/2026 -0.9%
  Delta Airlines 3.75% 10/28/2029 -0.6%
Vale Overseas LTD   3.75% 7/8/2030
Pacific Gas & Electric Co.   4.5% 12/15/2041
Pacific Gas & Electric Co.   4.55% 7/1/2030
Occidental Petroleum Corp.   5.5% 12/1/2025
US Steel Corp.   6.65% 6/1/2037
United States STL Corp. New   6.25% 3/15/2026
Occidental Petroleum Corp.   6.125% 1/1/2031
Vale Overseas LTD   6.25% 8/10/2026
Occidental Petroleum Corp.   5.875% 9/1/2025
Citigroup Inc.   VAR% PERP (4)
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.05% 0.27% 1.07% 1.92% 8.36% 9.33%
Mining 0.14% 1.18% 6.80% 50.87% -3.11% -0.07%
Construction -0.10% 0.10% 1.16% 4.06% 8.72% 9.29%
Manufacturing -0.04% 0.46% 1.72% 4.82% 6.89% 7.99%
Transportion, Communication, Electric/Gas -0.08% 0.36% 1.41% 4.58% 6.52% 7.79%
Wholesale -0.02% 0.59% 1.91% 2.66% 4.23% 5.74%
Retail -0.00% 0.92% 2.70% 5.77% 7.16% 8.47%
Finance, Insurance, Real-Estate -0.08% 0.36% 1.97% 4.85% 5.97% 7.34%
Services -0.06% 0.63% 1.81% 3.82% 6.53% 7.68%
Public Administration 0.11% 0.49% 1.19% 2.56% 9.88% 11.29%
Energy 0.09% 1.44% 6.88% 44.59% -1.03% 2.43%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Austin Bidco Inc. (USD) 7.125% 12/15/2028 144A (12/09/2020): 300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 7.13%.

2. Global Net Lease Inc. (USD) 3.75% 12/15/2027 144A (12/09/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.75%.

3. Blue Racer Midstream LLC (USD) 7.625% 12/15/2025 144A (12/09/2020): 600MM Senior Unsecured Notes, Price at Issuance 100, Yielding 7.63%.

4. Vedanta Resources PLC (USD) 13.875% 1/21/2024 Reg S (12/09/2020): 1000MM Senior Unsecured Notes.

5. UEP Penonome II SA (USD) 6.5% 10/1/2038 Reg S (12/09/2020): 262MM Secured Notes, Price at Issuance 100, Yielding 6.5%.

6. Blue Racer Midstream LLC (USD) 7.625% 12/15/2025 Reg S (12/09/2020): 600MM Senior Unsecured Notes, Price at Issuance 100, Yielding 7.63%.

7. Austin Bidco Inc. (USD) 7.125% 12/15/2028 Reg S (12/09/2020): 300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 7.13%.

8. Fortress Trans & Inf Inv LLC (USD) 6.5% 10/1/2025 (12/09/2020): 400MM Senior Unsecured Notes, Price at Issuance 101.75, Yielding 6.07%.

9. LBM Acquisition LLC (USD) 6.25% 1/15/2029 Reg S (12/09/2020): 550MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.25%.

10. LBM Acquisition LLC (USD) 6.25% 1/15/2029 144A (12/09/2020): 550MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.25%.

1. Unified Women’s Healthcare LP: $560MM TLs: $420MM TLB (B-); $140MM TL

2. Ozark Holdings LLC: $400MM TLB

3. Provation Software Group Inc.: $330MM TLs: $250MM TL; $80MM TL2

4. Energizer Holdings Inc.: $1.2B TLB (BB+)

5. Adtalem: $1.4B credit facilities: $400MM revolver; $1B TLB

6. Centerfield: $500MM TL (B2/B): $400MM TLB; $100MM DD

7. Asurion LLC: $2.087B TLB8

8. American Public Education Inc.: $195MM credit facilities: $20MM revolver; $175MM TLB

9. Commercehub Inc.: $790MM senior credit facilities: $50MM revolver; $530MM TLB; $210MM TL

10. Unified Women’s Healthcare LP: $560MM TLs: $420MM TLB (B-); $140MM TL

Additional Commentary

NEW ISSUANCE WATCH:  Austin Bidco Inc.  issued 500 MM in notes.
Top Widening Loans Top Narrowing Loans
GIP III Stetson I (USD) TLB L+425 07/18/2025
Aernnova Aerospace SA (EUR) TLB E+300 01/31/2027
LA Fitness PLC (USD) TLA L+225 01/08/2025
Compass IV LTD (EUR) TL E+800 05/09/2026
Odyssey Logistics & Technology Corp. (USD) TL L+375 10/12/2024
iHeartCommunications Inc. (USD) RC L+150 05/01/2023
Comet Bidco LTD (GBP) TLB L+500 10/06/2024
Radio One (USD) TLB L+400 04/18/2023
Securus Technologies Inc. (USD) TL L+450 11/01/2024
StandardAero (USD) TL L+350 04/08/2026

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 15 bps (basis points), as of 12/10/2020
  • Net negative capital flows into high-yield ETFs & mutual funds
INVESTMENT GRADE BOND RESEARCH
December 10, 2020
Bond Markets

GLOBAL MARKETS WERE MIXED AS COVID IS CONTINUING TO SURGE. STIMULUS TALKS ARE AT A DEADLOCK UNTIL PROBABLY THE GEORGIA SENATE RACE DETERMINES WHO CONTROLS THE SENATE. 10 Year Treasury notes were UP 2.8 bps. S&P -0.13%, Dow -0.23%, NASDAQ +0.54%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 70.6 MILLION+ CASES AND 1.59 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 16 MILLION+ CASES AND 300000+ 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
+   Boeing Co. 3.625% 2/1/2031 +0.8%
  Anheuser-Busch Inbev Worldwide Inc. 4.5% 6/1/2050 +1.7%
  GE Capital Intl. Funding Co. 4.418% 11/15/2035 +1.0%
  Gilead Sciences Inc. 2.8% 10/1/2050 +1.5%
  Boeing Co. 5.805% 5/1/2050 +2.2%
–   Abbvie Inc. 2.95% 11/21/2026 144A -0.1%
  Vale Overseas LTD 3.75% 7/8/2030 -0.0%
  Dupont de Nemours Inc. 2.169% 5/1/2023 -0.0%
  Pacific Gas & Electric Co. 4.55% 7/1/2030 -0.2%
  Raytheon Co. 3.125% 7/1/2050 -0.3%
Boeing Co.   3.625% 2/1/2031
Anheuser-Busch Inbev Worldwide Inc.   4.5% 6/1/2050
GE Capital Intl. Funding Co.   4.418% 11/15/2035
Gilead Sciences Inc.   2.8% 10/1/2050
Boeing Co.   5.805% 5/1/2050
Nasdaq Inc.   1.65% 1/15/2031
CVS Health Corp.   5.05% 3/25/2048
General Electric Co.   4.35% 5/1/2050
Verizon Communications Inc.   2.875% 11/20/2050
Home Depot Inc.   3.35% 4/15/2050
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.25% 0.11% 2.44% 2.68% 8.53% 9.38%
Construction -0.16% 0.12% 1.65% 4.97% 8.13% 8.56%
Manufacturing -0.21% -0.09% 1.04% 1.68% 9.08% 9.38%
Transportion, Communication, Electric/Gas -0.22% -0.05% 1.68% 1.92% 10.72% 11.01%
Wholesale -0.15% 0.08% 1.46% 3.00% 10.26% 10.88%
Retail -0.28% -0.30% 1.08% 1.99% 10.35% 10.60%
Finance, Insurance, Real-Estate -0.16% -0.02% 0.83% 1.48% 7.88% 8.21%
Services -0.28% -0.15% 1.19% 1.60% 8.66% 8.86%
Public Administration -0.00% 0.09% 0.48% 0.17% 5.30% 5.38%
Energy -0.23% 0.22% 2.77% 2.66% 7.53% 8.61%
 
Total returns (non-annualized) by rating, market weighted.
New Issues New Issues [Continued]
1. Ascot Group Limited (USD) 4.25% 12/15/2030 144A (12/09/2020): 400MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.25%.

2. Realty Income Corp. (USD) 0.75% 3/15/2026 (12/09/2020): 325MM Senior Unsecured Notes, Price at Issuance 99.192, Yielding .91%.

3. Enfragen Energia Sur SA (USD) 5.375% 12/30/2030 Reg S (12/09/2020): 710MM Secured Notes, Price at Issuance 99.039, Yielding 5.5%.

4. Global Net Lease Inc. (USD) 3.75% 12/15/2027 Reg S (12/09/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.75%.

5. RioCan Realty Investments Partnership Ten LP (CAD) 1.974% 6/15/2026 (12/09/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 1.97%.

6. Phoenician RE LTD. (USD) FLT% 12/14/2023 (12/09/2020): 95MM Unsecured Notes, Price at Issuance 100.

7. Chip Mortgage Trust (CAD) 1.738% 12/15/2025 (12/10/2020): 250MM Secured Notes, Price at Issuance 100, Yielding 1.74%.

Additional Commentary

NEW ISSUANCE WATCH:  Charles Schwab Corp issued 2500 MM in notes.
Top Widening Loans Top Narrowing Loans
GIP III Stetson I (USD) TLB L+425 07/18/2025
Aernnova Aerospace SA (EUR) TLB E+300 01/31/2027
LA Fitness PLC (USD) TLA L+225 01/08/2025
Compass IV LTD (EUR) TL E+800 05/09/2026
Odyssey Logistics & Technology Corp. (USD) TL L+375 10/12/2024
iHeartCommunications Inc. (USD) RC L+150 05/01/2023
Comet Bidco LTD (GBP) TLB L+500 10/06/2024
Radio One (USD) TLB L+400 04/18/2023
Securus Technologies Inc. (USD) TL L+450 11/01/2024
StandardAero (USD) TL L+350 04/08/2026

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 bps (basis points), as of 12/09/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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