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North American Bond Research – December 14, 2020

Posted on December 14, 2020
HIGH YIELD BOND RESEARCH
December 14, 2020
Bond Markets

EUROPEAN MARKETS WERE UP AS COVID FIGURES GETTING MUCH BETTER. POST-BREXIT  DEAL MAKING PROGRESS AND GETTING AN EXTENSION. US MARKETS DOWN AS NO PROGRESS ON STIMULUS IS MADE. 10 Year Treasury notes were UP 2.8 bps. S&P -0.62%, Dow -0.44%, NASDAQ +0.50%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 73.1 MILLION+ CASES AND 1.63 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 16.88 MILLION+ CASES AND 308000+ 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
+   Occidental Petroleum Corp. 6.125% 1/1/2031 +0.4%
  Genesis Energy LP 8% 1/15/2027 +0.8%
  SM Energy Co. 5% 1/15/2024 +2.9%
  Pacific Gas & Electric Co. 4.95% 7/1/2050 +1.1%
  Vale Overseas LTD 3.75% 7/8/2030 +0.5%
–   Broadcom LTD 4.3% 11/15/2032 -0.4%
  Rohm & Haas Co. 7.85% 7/15/2029 -0.3%
  Ford Motor Co. 8.5% 4/21/2023 -0.6%
  Community Health Systems Inc. 6.25% 3/31/2023 -0.1%
  Broadcom LTD 4.75% 4/15/2029 -0.0%
Broadcom LTD   4.3% 11/15/2032
Occidental Petroleum Corp.   6.125% 1/1/2031
Genesis Energy LP   8% 1/15/2027
Rohm & Haas Co.   7.85% 7/15/2029
Ford Motor Co.   8.5% 4/21/2023
SM Energy Co.   5% 1/15/2024
Pacific Gas & Electric Co.   4.95% 7/1/2050
Community Health Systems Inc.   6.25% 3/31/2023
Citigroup Inc.   VAR% PERP (4)
Vale Overseas LTD   3.75% 7/8/2030
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.10% 0.14% 1.03% 2.26% 8.39% 9.19%
Mining 0.07% 1.18% 7.00% 74.49% -1.85% 0.49%
Construction -0.12% -0.06% 0.98% 3.86% 8.53% 8.95%
Manufacturing -0.11% 0.01% 1.53% 4.81% 6.77% 7.88%
Transportion, Communication, Electric/Gas -0.10% 0.07% 1.33% 5.09% 6.83% 7.86%
Wholesale -0.17% 0.64% 1.93% 2.88% 4.51% 5.74%
Retail -0.09% -0.13% 2.10% 4.90% 6.72% 7.95%
Finance, Insurance, Real-Estate -0.10% 0.01% 1.52% 4.24% 5.97% 6.99%
Services -0.13% 0.06% 1.42% 3.71% 7.01% 8.16%
Public Administration -0.07% 0.49% 1.10% 2.75% 10.22% 11.27%
Energy 0.05% 0.98% 7.10% 64.70% -0.25% 2.43%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 12/14/2020)
1. Energizer Holdings Inc.: $1.2B TLB (BB+)

2. Planview: $890MM TLs: $535MM TL (B2/B-); $125MM DD; $230MM TL (Caa2/CCC+)

3. Pointclickcare: $450MM TLB (B1/B+)

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

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

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

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

8. Asurion LLC: $2.087B TLB8

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

10. Community Health: $1050MM senior secured notes (Caa2/B-)

Additional Commentary

NEW ISSUANCE WATCH:  No New Issues.
Top Widening Loans Top Narrowing Loans
Learning Care Group Inc. (USD) TL L+750 03/13/2026
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
Allsup’s (USD) TLB L+625 11/18/2024
Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027
Fortress Merger Sub Inc. (USD) TL L+400 10/21/2023
Flynn Restaurant Group LP (USD) TL2 L+700 06/29/2026
ADB Safegate (EUR) TLB E+350 10/02/2024
EG Group (EUR) TL E+775 03/23/2026
Team Health Inc. (USD) TLB L+275 02/06/2024
Radio One (USD) TLB L+400 04/18/2023

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 bps (basis points), as of 12/14/2020
  • Net negative capital flows into high-yield ETFs & mutual funds
INVESTMENT GRADE BOND RESEARCH
December 14, 2020
Bond Markets

EUROPEAN MARKETS WERE UP AS COVID FIGURES GETTING MUCH BETTER. POST-BREXIT  DEAL MAKING PROGRESS AND GETTING AN EXTENSION. US MARKETS DOWN AS NO PROGRESS ON STIMULUS IS MADE. 10 Year Treasury notes were UP 2.8 bps. S&P -0.62%, Dow -0.44%, NASDAQ +0.50%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 73.1 MILLION+ CASES AND 1.63 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 16.88 MILLION+ CASES AND 308000+ 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
+   Charles Schwab Corp. VAR% PERP (1) +2.0%
  CBOE Hldgs Inc. 1.625% 12/15/2030 +0.3%
  Microsoft Corp. 2.675% 6/1/2060 +1.5%
  Verizon Communications Inc. 2.875% 11/20/2050 +0.2%
  HSBC Hldg PLC VAR% PERP (1) +0.5%
–   GE Capital Intl. Funding Co. 4.418% 11/15/2035 -0.1%
  Broadcom LTD 4.15% 11/15/2030 -0.2%
  Broadcom LTD 4.3% 11/15/2032 -0.4%
  Nasdaq Inc. 2.5% 12/21/2040 -0.5%
  Bank of America Corp. 4.083% 3/20/2051 -0.2%
Charles Schwab Corp.   VAR% PERP (1)
GE Capital Intl. Funding Co.   4.418% 11/15/2035
Broadcom LTD   4.15% 11/15/2030
Broadcom LTD   4.3% 11/15/2032
CBOE Hldgs Inc.   1.625% 12/15/2030
Nasdaq Inc.   2.5% 12/21/2040
Goldman Sachs Group Inc.   VAR% 12/9/2026
Microsoft Corp.   2.675% 6/1/2060
Verizon Communications Inc.   2.875% 11/20/2050
HSBC Hldg PLC   VAR% PERP (1)
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.03% 0.14% 2.52% 2.91% 8.66% 9.12%
Construction -0.04% 0.05% 1.95% 4.16% 8.75% 8.79%
Manufacturing -0.02% 0.01% 1.21% 1.79% 9.35% 9.39%
Transportion, Communication, Electric/Gas 0.05% 0.15% 1.99% 2.14% 10.97% 10.91%
Wholesale -0.04% 0.04% 1.54% 2.92% 10.25% 10.60%
Retail 0.00% 0.07% 1.35% 1.98% 10.86% 10.76%
Finance, Insurance, Real-Estate -0.03% 0.01% 0.96% 1.57% 8.08% 8.24%
Services -0.04% -0.03% 1.34% 1.53% 8.75% 8.78%
Public Administration 0.04% 0.10% 0.29% 0.45% 5.34% 5.40%
Energy 0.02% 0.13% 2.73% 2.94% 7.75% 8.37%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]

(None Current 12/14/2020)
Additional Commentary

NEW ISSUANCE WATCH:  No new issues.
Top Widening Loans Top Narrowing Loans
Learning Care Group Inc. (USD) TL L+750 03/13/2026
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
Allsup’s (USD) TLB L+625 11/18/2024
Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027
Fortress Merger Sub Inc. (USD) TL L+400 10/21/2023
Flynn Restaurant Group LP (USD) TL2 L+700 06/29/2026
ADB Safegate (EUR) TLB E+350 10/02/2024
EG Group (EUR) TL E+775 03/23/2026
Team Health Inc. (USD) TLB L+275 02/06/2024
Radio One (USD) TLB L+400 04/18/2023

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 bps (basis points), as of 12/14/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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