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North American Bond Research – December 16, 2020

Posted on December 16, 2020
HIGH YIELD BOND RESEARCH
December 16, 2020
Bond Markets

GLOBAL MARKETS WERE UP AS US SENATE NEARS A DEAL. STIMULUS CHECKS WILL BE INCLUDED. MONEY FOR STATES IS A STICKING POINT AND NEEDS TO BE IRONED OUT. 10 Year Treasury notes were DOWN 0.3 bps. S&P +0.18%, Dow  -0.15%, NASDAQ +0.5%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 74.4 MILLION+ CASES AND 1.65 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 17.3 MILLION+ CASES AND 314000+ DEATHS. Among high-grade bonds showing topmost price gains at appreciable volumes traded, Hertz Corp (The) (USD) 7% 1/15/2028made analysts’ ‘Conviction Buy’ list. (See the chart below for Hertz Corp  bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Cheniere Corpus Christi Hldgs LLC 5.125% 6/30/2027 +0.1%
Occidental Petroleum Corp. 6.125% 1/1/2031 +0.6%
Occidental Petroleum Corp. 3.4% 4/15/2026 +0.2%
Micron Technology Inc. 4.663% 2/15/2030 +0.3%
Broadcom LTD 4.7% 4/15/2025 +1.0%
–   Sabine Pass Liquefaction LLC 5.625% 3/1/2025 -0.2%
T-Mobile USA Inc. 3.5% 4/15/2025 144A -0.0%
Broadcom LTD 4.75% 4/15/2029 -0.1%
Pacific Gas & Electric Co. 4.75% 2/15/2044 -0.6%
EQT Corp. 3.9% 10/1/2027 -0.0%
Sabine Pass Liquefaction LLC   5.625% 3/1/2025
T-Mobile USA Inc.   3.5% 4/15/2025 144A
Broadcom LTD   4.75% 4/15/2029
Cheniere Corpus Christi Hldgs LLC   5.125% 6/30/2027
Occidental Petroleum Corp.   6.125% 1/1/2031
Pacific Gas & Electric Co.   4.75% 2/15/2044
Occidental Petroleum Corp.   3.4% 4/15/2026
EQT Corp.   3.9% 10/1/2027
Micron Technology Inc.   4.663% 2/15/2030
Latam Finance Limited   6.875% 4/11/2024 Reg S
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.04% 0.11% 1.02% 2.20% 8.49% 8.97%
Mining 0.05% 0.89% 7.51% 88.44% -1.27% 0.01%
Construction -0.04% -0.13% 1.36% 3.57% 9.14% 9.40%
Manufacturing -0.08% -0.05% 1.86% 4.99% 7.10% 7.87%
Transportion, Communication, Electric/Gas -0.03% 0.02% 1.61% 5.07% 6.86% 7.60%
Wholesale -0.11% 0.31% 2.01% 2.48% 3.88% 4.91%
Retail -0.12% 0.04% 2.94% 5.03% 7.23% 8.11%
Finance, Insurance, Real-Estate -0.04% 0.04% 1.54% 3.95% 6.32% 6.87%
Services -0.07% -0.03% 1.99% 3.77% 6.85% 7.75%
Public Administration -0.25% 0.49% 1.10% 2.09% 10.29% 11.55%
Energy 0.01% 0.79% 7.40% 77.11% 0.50% 2.13%
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. AdaptHealth LLC (USD) 4.625% 8/1/2029 144A (12/15/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.63%.

2. Scripps Escrow Inc. (USD) 3.875% 1/15/2029 144A (12/15/2020): 550MM First Lien Notes, Price at Issuance 100, Yielding 3.88%.

3. Scripps Escrow Inc. (USD) 5.375% 1/15/2031 144A (12/15/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.38%.

4. Affinity Gaming LLC (USD) 6.875% 12/15/2027 Reg S (12/15/2020): 475MM First Lien Notes, Price at Issuance 100, Yielding 6.88%.

5. Valvoline Inc. (USD) 3.625% 6/15/2031 144A (12/15/2020): 535MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.63%.

6. NCL Corp. LTD (USD) 5.875% 3/15/2026 144A (12/15/2020): 850MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.88%.

7. Affinity Gaming LLC (USD) 6.875% 12/15/2027 144A (12/15/2020): 475MM First Lien Notes, Price at Issuance 100, Yielding 6.88%.

8. Tallgrass Energy Partners LP (USD) 6% 12/31/2030 144A (12/15/2020): 750MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6%.

9. AdaptHealth LLC (USD) 4.625% 8/1/2029 Reg S (12/15/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.63%.

10. Scripps Escrow Inc. (USD) 3.875% 1/15/2029 Reg S (12/15/2020): 550MM First Lien Notes, Price at Issuance 100, Yielding 3.88%.

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:  AdaptHealth LLC issued 500 MM in notes. 
Top Widening Loans Top Narrowing Loans
ADB Safegate (EUR) TLB E+350 10/02/2024
ADB Safegate (EUR) RC E+325 10/02/2023
NCL Corp. LTD (USD) TLA L+150 01/02/2024
NEP NCP Holdco Inc. (USD) TL2 L+700 10/10/2026
Learning Care Group Inc. (USD) TL L+750 03/13/2026
Aimbridge Hospitality LLC (USD) TLB L+375 02/01/2026
Aernnova Aerospace SA (EUR) TLB E+300 01/31/2027
Auris Luxembourg III SA (EUR) TL E+675 02/21/2027
Alterra Mountain (USD) TLB L+450 08/31/2026
Fortress Merger Sub Inc. (USD) TL L+400 10/21/2023

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 16 bps (basis points), as of 12/16/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
December 16, 2020
Bond Markets

GLOBAL MARKETS WERE UP AS US SENATE NEARS A DEAL. STIMULUS CHECKS WILL BE INCLUDED. MONEY FOR STATES IS A STICKING POINT AND NEEDS TO BE IRONED OUT. 10 Year Treasury notes were DOWN 0.3 bps. S&P +0.18%, Dow  -0.15%, NASDAQ +0.5%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 74.4 MILLION+ CASES AND 1.65 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 17.3 MILLION+ CASES AND 314000+ 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
+   Goldman Sachs BDC Inc. 2.875% 1/15/2026 +0.2%
  General Motors Financial Co. Inc. 3.6% 6/21/2030 +0.1%
  Owl Rock Capital Corp. 3.4% 7/15/2026 +0.0%
  Verizon Communications Inc. 4.522% 9/15/2048 +1.6%
  BP Capital Markets America Inc. 2.939% 6/4/2051 +0.3%
–   Broadcom LTD 4.15% 11/15/2030 -0.1%
  Sabine Pass Liquefaction LLC 5.625% 3/1/2025 -0.2%
  Citigroup Inc. 2.572% 6/3/2031 -0.0%
  Starbucks Corp. 3.5% 11/15/2050 -0.7%
  Banco Santander SA 2.749% 12/3/2030 -0.1%
Goldman Sachs BDC Inc.   2.875% 1/15/2026
Broadcom LTD   4.15% 11/15/2030
General Motors Financial Co. Inc.   3.6% 6/21/2030
Owl Rock Capital Corp.   3.4% 7/15/2026
Verizon Communications Inc.   4.522% 9/15/2048
BP Capital Markets America Inc.   2.939% 6/4/2051
AstraZeneca PLC   1.375% 8/6/2030
Sabine Pass Liquefaction LLC   5.625% 3/1/2025
Bank of America Corp.   VAR% 10/24/2031
Walt Disney Co.   2% 9/1/2029
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.13% 0.05% 2.40% 2.96% 8.86% 9.19%
Construction -0.16% 0.09% 1.67% 4.36% 8.88% 9.01%
Manufacturing -0.13% -0.11% 1.00% 1.60% 9.36% 9.37%
Transportion, Communication, Electric/Gas -0.18% -0.02% 1.50% 1.87% 10.87% 10.79%
Wholesale -0.17% 0.04% 1.50% 2.83% 10.43% 10.76%
Retail -0.13% -0.16% 1.05% 1.94% 10.65% 10.60%
Finance, Insurance, Real-Estate -0.08% -0.07% 0.77% 1.43% 8.10% 8.22%
Services -0.09% -0.12% 1.08% 1.40% 8.70% 8.73%
Public Administration 0.16% 0.07% 0.22% 0.21% 5.33% 5.33%
Energy -0.13% 0.05% 2.64% 3.06% 7.88% 8.31%
 
Total returns (non-annualized) by rating, market weighted.
New Issues New Issues [Continued]
1. Berry Global Inc. (USD) 1.57% 1/15/2026 144A (12/15/2020): 750MM First Lien Notes, Price at Issuance 99.966, Yielding 1.58%.

2. MET Tower Global Funding (USD) FLT% 12/14/2022 144A (12/15/2020): 100MM Secured Notes, Price at Issuance 100.

3. Berry Global Inc. (USD) 1.57% 1/15/2026 Reg S (12/15/2020): 750MM First Lien Notes, Price at Issuance 99.966, Yielding 1.58%.

4. Dream Industrial LP (CAD) 1.662% 12/22/2025 (12/15/2020): 250MM Senior Unsecured Notes, Price at Issuance 100, Yielding 1.66%.

5. Mystic RE IV LTD (USD) FLT% 1/8/2024 (12/16/2020): 300MM Unsecured Notes, Price at Issuance 100.

Additional Commentary

NEW ISSUANCE WATCH:  Berry Global Inc. issued 750 MM in Notes. 
Top Widening Loans Top Narrowing Loans
ADB Safegate (EUR) TLB E+350 10/02/2024
ADB Safegate (EUR) RC E+325 10/02/2023
NCL Corp. LTD (USD) TLA L+150 01/02/2024
NEP NCP Holdco Inc. (USD) TL2 L+700 10/10/2026
Learning Care Group Inc. (USD) TL L+750 03/13/2026
Aimbridge Hospitality LLC (USD) TLB L+375 02/01/2026
Aernnova Aerospace SA (EUR) TLB E+300 01/31/2027
Auris Luxembourg III SA (EUR) TL E+675 02/21/2027
Alterra Mountain (USD) TLB L+450 08/31/2026
Fortress Merger Sub Inc. (USD) TL L+400 10/21/2023

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 16 bps (basis points), as of 12/16/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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