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North American Bond Research – December 15, 2020

Posted on December 15, 2020
HIGH YIELD BOND RESEARCH
December 15, 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 1.7 bps.  S&P +1.33%, Dow +1.29%, NASDAQ +1.25%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 73.7 MILLION+ CASES AND 1.64 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 17.1 MILLION+ CASES AND 310000+ 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. 4.25% 3/15/2046 +1.7%
  Genesis Energy LP 8% 1/15/2027 +0.2%
  Cheniere Corpus Christi Hldgs LLC 5.875% 3/31/2025 +0.1%
  Western Digital Corp. 4.75% 2/15/2026 +0.1%
  Occidental Petroleum Corp. 5.5% 12/1/2025 +0.6%
–   Broadcom LTD 4.3% 11/15/2032 -0.3%
  General Motors Co. 5.2% 4/1/2045 -0.0%
  Ford Motor Co. 8.5% 4/21/2023 -0.1%
  Community Health Systems Inc. 6.25% 3/31/2023 -0.0%
  Micron Technology Inc. 4.185% 2/15/2027 -0.5%
Pacific Gas & Electric Co.   4.25% 3/15/2046
Pacific Gas & Electric Co.   4.55% 7/1/2030
Genesis Energy LP   8% 1/15/2027
Cheniere Corpus Christi Hldgs LLC   5.875% 3/31/2025
Broadcom LTD   4.3% 11/15/2032
Western Digital Corp.   4.75% 2/15/2026
Occidental Petroleum Corp.   5.5% 12/1/2025
Occidental Petroleum Corp.   6.125% 1/1/2031
Bank of Nova Scotia   FLT% 9/15/2023
Broadcom LTD   4.7% 4/15/2025
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.00% 0.13% 1.06% 2.34% 8.51% 8.96%
Mining 0.10% 0.86% 7.30% 88.73% -1.55% -0.29%
Construction -0.05% -0.03% 1.40% 3.77% 9.28% 9.60%
Manufacturing -0.01% -0.02% 1.91% 5.03% 6.92% 7.73%
Transportion, Communication, Electric/Gas -0.04% 0.02% 1.52% 5.07% 6.80% 7.54%
Wholesale -0.03% 0.37% 2.24% 2.82% 4.29% 5.26%
Retail 0.01% -0.31% 2.43% 4.49% 6.59% 7.37%
Finance, Insurance, Real-Estate -0.03% -0.02% 1.72% 4.64% 6.07% 6.82%
Services -0.03% -0.16% 1.82% 3.56% 6.59% 7.35%
Public Administration 0.29% 0.76% 1.37% 2.56% 10.57% 11.85%
Energy 0.10% 0.77% 7.07% 76.85% 0.25% 1.90%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. EnLink Midstream Partners LP (USD) 5.625% 1/15/2028 144A (12/14/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.63%.

2. EnLink Midstream Partners LP (USD) 5.625% 1/15/2028 Reg S (12/14/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.63%.

3. ATS Automation Tooling Systems (USD) 4.125% 12/15/2028 Reg S (12/14/2020): 350MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.13%.

4. Archrock Partners LP (USD) 6.25% 4/1/2028 (12/14/2020): 300MM Senior Unsecured Notes, Price at Issuance 104.875, Yielding 5.43%.

5. GFL Environmental Inc. (USD) 3.5% 9/1/2028 Reg S (12/14/2020): 750MM Secured Notes, Price at Issuance 100, Yielding 3.5%.

6. Ascent Resources Utica LLC (USD) 8.25% 12/31/2028 Reg S (12/14/2020): 300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 8.25%.

7. ATS Automation Tooling Systems (USD) 4.125% 12/15/2028 144A (12/14/2020): 350MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.13%.

8. GFL Environmental Inc. (USD) 3.5% 9/1/2028 144A (12/14/2020): 750MM Secured Notes, Price at Issuance 100, Yielding 3.5%.

9. Ascent Resources Utica LLC (USD) 8.25% 12/31/2028 144A (12/14/2020): 300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 8.25%.

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
Hurtigruten Group AS (EUR) TLC E+800 06/16/2023
Jo-Ann Stores Inc. (USD) TL2 L+925 05/02/2024
EG Group (EUR) TL E+775 03/23/2026
Areas SA (EUR) TL 07/01/2026
Conduent Business Services LLC (USD) TLA L+175 12/07/2022
CSM Bakery (USD) TL L+1000 02/04/2022
Amer Sports Corp. (EUR) TLB E+450 03/01/2026
Eastern Power LLC (USD) TLB L+375 10/02/2023
Douglas Holding AG (EUR) TLB8 L+325 08/13/2022
Fortress Merger Sub Inc. (USD) TL2 L+850 10/21/2024

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 bps (basis points), as of 12/15/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
December 15, 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 1.7 bps. S&P +1.33%, Dow +1.29%, NASDAQ +1.25%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 73.7 MILLION+ CASES AND 1.64 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 17.1 MILLION+ CASES AND 310000+ 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
+   General Motors Financial Co. Inc. 2.75% 6/20/2025 +0.1%
  Abbvie Inc. 3.2% 11/21/2029 144A +0.2%
  Gilead Sciences Inc. 2.8% 10/1/2050 +0.4%
  Owl Rock Capital Corp. 3.4% 7/15/2026 +0.1%
  Bank of America Corp. 4.083% 3/20/2051 +0.2%
–   Walt Disney Co. 2.65% 1/13/2031 -0.1%
  Amazon.com Inc. 2.5% 6/3/2050 -0.2%
  GlaxoSmithKline Capital PLC 2.875% 6/1/2022 -0.0%
  Broadcom Corp. 3.875% 1/15/2027 -0.0%
  Walt Disney Co. 6.4% 12/15/2035 -0.2%
General Motors Financial Co. Inc.   2.75% 6/20/2025
Abbvie Inc.   3.2% 11/21/2029 144A
Gilead Sciences Inc.   2.8% 10/1/2050
Owl Rock Capital Corp.   3.4% 7/15/2026
Bank of America Corp.   4.083% 3/20/2051
Philip Morris Intl. Inc.   1.125% 5/1/2023
Vodafone Group PLC   4.375% 5/30/2028
Walt Disney Co.   2.65% 1/13/2031
Caterpillar Financial Services Corp.   0.45% 9/14/2023
Amazon.com Inc.   2.5% 6/3/2050
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.03% 0.11% 2.37% 3.05% 8.88% 9.23%
Construction -0.00% 0.21% 1.71% 3.81% 8.78% 8.94%
Manufacturing -0.10% -0.08% 1.01% 1.69% 9.40% 9.43%
Transportion, Communication, Electric/Gas -0.15% 0.06% 1.54% 1.97% 10.96% 10.89%
Wholesale -0.01% 0.05% 1.56% 3.04% 10.44% 10.79%
Retail -0.15% -0.12% 1.07% 1.98% 10.60% 10.57%
Finance, Insurance, Real-Estate -0.11% -0.08% 0.77% 1.50% 8.17% 8.30%
Services -0.13% -0.14% 1.06% 1.47% 8.74% 8.79%
Public Administration -0.15% -0.02% 0.06% 0.32% 5.16% 5.17%
Energy -0.02% 0.10% 2.63% 3.15% 7.84% 8.30%
 
Total returns (non-annualized) by rating, market weighted.
New Issues New Issues [Continued]
1. Microchip Technology Inc. (USD) 0.972% 2/15/2024 Reg S (12/14/2020): 1400MM Secured Notes, Price at Issuance 100, Yielding .97%.

2. Microchip Technology Inc. (USD) 0.972% 2/15/2024 144A (12/14/2020): 1400MM Secured Notes, Price at Issuance 100, Yielding .97%.

Additional Commentary

NEW ISSUANCE WATCH:  Microchip Technology Inc. issued 1400 MM in Notes. 
Top Widening Loans Top Narrowing Loans
Hurtigruten Group AS (EUR) TLC E+800 06/16/2023
Jo-Ann Stores Inc. (USD) TL2 L+925 05/02/2024
EG Group (EUR) TL E+775 03/23/2026
Areas SA (EUR) TL 07/01/2026
Conduent Business Services LLC (USD) TLA L+175 12/07/2022
CSM Bakery (USD) TL L+1000 02/04/2022
Amer Sports Corp. (EUR) TLB E+450 03/01/2026
Eastern Power LLC (USD) TLB L+375 10/02/2023
Douglas Holding AG (EUR) TLB8 L+325 08/13/2022
Fortress Merger Sub Inc. (USD) TL2 L+850 10/21/2024

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 bps (basis points), as of 12/15/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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