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North American Bond Research – December 17, 2020

Posted on December 17, 2020
HIGH YIELD BOND RESEARCH
December 17, 2020
Bond Markets
GLOBAL MARKETS WERE UP AS A $900 BILLION CORONA VIRUS STIMULUS PACKAGE TAKES SHAPE. DEATHS AND CASES OF CORONA VIRUS ARE EXPLODING AS MORE THAN 10,000 WORLD-WIDE DIE PER DAY. 10 Year Treasury notes were UP 2.1 bps. S&P +0.58%, Dow  +0.49%, NASDAQ +0.84%.

CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 75.2 MILLION+ CASES AND 1.67 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 17.6 MILLION+ CASES AND 317000+ 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
+   Macy’s Retail Hldg Inc. 3.625% 6/1/2024 +4.4%
  Antero Resources Corp. 5% 3/1/2025 +0.1%
  Broadcom LTD 4.11% 9/15/2028 +1.2%
  Pacific Gas & Electric Co. 4.45% 4/15/2042 +1.1%
  Pacific Gas & Electric Co. 3.75% 8/15/2042 +1.1%
–   T-Mobile USA Inc. 3.5% 4/15/2025 144A -0.0%
  Broadcom LTD 4.75% 4/15/2029 -0.3%
  Petrobras Global Finance BV 6.85% 6/5/2115 -0.2%
  Cheniere Corpus Christi Hldgs LLC 5.125% 6/30/2027 -0.0%
  Broadcom LTD 4.7% 4/15/2025 -1.0%
Broadcom LTD   4.11% 9/15/2028
Macy’s Retail Hldg Inc.   3.625% 6/1/2024
Citigroup Inc.   VAR% PERP (4)
T-Mobile USA Inc.   3.5% 4/15/2025 144A
Antero Resources Corp.   5% 3/1/2025
Pacific Gas & Electric Co.   4.45% 4/15/2042
Broadcom LTD   4.75% 4/15/2029
Pacific Gas & Electric Co.   3.75% 8/15/2042
Petrobras Global Finance BV   6.85% 6/5/2115
Cheniere Corpus Christi Hldgs LLC   5.125% 6/30/2027
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.02% 0.02% 1.09% 2.42% 8.46% 8.95%
Mining 0.08% 1.09% 8.27% 139.72% -1.55% -0.49%
Construction -0.06% -0.11% 1.14% 3.35% 8.23% 8.50%
Manufacturing -0.02% 0.02% 2.00% 4.87% 7.07% 7.77%
Transportion, Communication, Electric/Gas -0.08% 0.11% 1.61% 5.13% 6.88% 7.49%
Wholesale -0.13% 0.22% 2.44% 3.67% 5.90% 6.68%
Retail -0.04% 0.01% 3.06% 5.23% 7.38% 8.29%
Finance, Insurance, Real-Estate -0.03% 0.08% 1.72% 4.50% 6.16% 6.73%
Services -0.06% -0.02% 1.98% 3.71% 6.90% 7.61%
Public Administration 0.11% 0.49% 0.37% 2.19% 10.41% 11.85%
Energy 0.07% 1.01% 8.29% 120.16% 0.04% 1.47%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Townsquare Media Inc. (USD) 6.875% 2/1/2026 144A (12/16/2020): 550MM Secured Notes, Price at Issuance 100, Yielding 6.88%.

2. 99 Escrow Issuer Inc. (USD) 7.5% 1/15/2026 144A (12/16/2020): 350MM Secured Notes, Price at Issuance 100, Yielding 7.5%.

3. 99 Escrow Issuer Inc. (USD) 7.5% 1/15/2026 (12/16/2020): 350MM Secured Notes, Price at Issuance 100, Yielding 7.5%.

4. PBF Hldg Co. LLC (USD) 9.25% 5/15/2025 (12/16/2020): 250MM Secured Notes, Price at Issuance 100.25, Yielding 9.18%.

5. Townsquare Media Inc. (USD) 6.875% 2/1/2026 Reg S (12/16/2020): 550MM Secured Notes, Price at Issuance 100, Yielding 6.88%.

6. 99 Escrow Issuer Inc. (USD) 7.5% 1/15/2026 Reg S (12/16/2020): 350MM Secured Notes, Price at Issuance 100, Yielding 7.5%.

 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:  99 Escrow Issuer Inc. issued 350 MM in notes. 
Top Widening Loans Top Narrowing Loans
Penn Virginia Corp. (USD) TL2 L+700 09/29/2022
Roadster Finance (EUR) TL 12/08/2022
Compass IV LTD (EUR) TL E+800 05/09/2026
99 Cents Only Stores (USD) TL PIK L+500 01/13/2022
Comet Bidco LTD (USD) TLB L+500 10/06/2024		 Aimbridge Hospitality LLC (USD) TLB L+375 02/01/2026
Parques Reunidos (EUR) TLB E+750 09/17/2026
Misys LTD (EUR) TLB E+300 06/13/2024
Iliad SA (EUR) TLB E+425 11/09/2026
Vue Intl Bidco PLC (EUR) DD E+475 06/21/2026

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 12/17/2020
  • Net negative capital flows into high-yield ETFs & mutual funds
INVESTMENT GRADE BOND RESEARCH
December 17, 2020
Bond Markets
GLOBAL MARKETS WERE UP AS A $900 BILLION CORONA VIRUS STIMULUS PACKAGE TAKES SHAPE. DEATHS AND CASES OF CORONA VIRUS ARE EXPLODING AS MORE THEN 10,000 WORLD-WIDE DIE PER DAY. 10 Year Treasury notes were UP 2.1 bps. S&P +0.58%, Dow  +0.49%, NASDAQ +0.84%.

CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 75.2 MILLION+ CASES AND 1.67 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 17.6 MILLION+ CASES AND 317000+ 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
+   AT&T Inc. 1.65% 2/1/2028 +0.6%
  CVS Health Corp. 1.3% 8/21/2027 +0.1%
  AT&T Inc. 4.3% 2/15/2030 +0.0%
  CI Financial Corp. 3.2% 12/17/2030 +0.1%
  GE Capital Intl. Funding Co. 4.418% 11/15/2035 +0.5%
–   Microsoft Corp. 2.525% 6/1/2050 -0.1%
  Verizon Communications Inc. 4.125% 3/16/2027 -0.0%
  JP Morgan Chase & Co. 2.739% 10/15/2030 -0.0%
  Marriott Intl Inc. 5.75% 5/1/2025 -0.1%
  Gilead Sciences Inc. 2.8% 10/1/2050 -0.2%
Microsoft Corp.   2.525% 6/1/2050
AT&T Inc.   1.65% 2/1/2028
CVS Health Corp.   1.3% 8/21/2027
Verizon Communications Inc.   4.125% 3/16/2027
AT&T Inc.   4.3% 2/15/2030
CI Financial Corp.   3.2% 12/17/2030
GE Capital Intl. Funding Co.   4.418% 11/15/2035
Chevron Corp.   2.978% 5/11/2040
JP Morgan Chase & Co.   2.739% 10/15/2030
Bank of America Corp.   VAR% 10/24/2026
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.06% 0.25% 2.43% 3.02% 8.80% 9.20%
Construction -0.12% 0.16% 1.38% 4.05% 8.95% 9.23%
Manufacturing -0.10% 0.05% 1.06% 1.58% 9.45% 9.62%
Transportion, Communication, Electric/Gas -0.12% 0.08% 1.52% 1.86% 10.94% 11.03%
Wholesale -0.10% 0.12% 1.39% 2.77% 10.27% 10.71%
Retail -0.15% 0.02% 1.11% 1.83% 10.22% 10.41%
Finance, Insurance, Real-Estate -0.08% 0.04% 0.83% 1.43% 8.20% 8.47%
Services -0.10% 0.07% 1.08% 1.35% 8.66% 8.85%
Public Administration 0.01% 0.07% 0.44% 0.24% 5.15% 5.30%
Energy -0.05% 0.26% 2.64% 3.04% 7.94% 8.43%
 
Total returns (non-annualized) by rating, market weighted.
New Issues New Issues [Continued]
1. Fidus Investment Corp. (USD) 4.75% 1/31/2026 (12/16/2020): 125MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.75%.

2. Mystic RE IV LTD (USD) FLT% 1/8/2024 (12/16/2020): 300MM Unsecured Notes, Price at Issuance 100.
Additional Commentary
NEW ISSUANCE WATCH:  Fidus Investment Corp. issued 125 MM in Notes. 
Top Widening Loans Top Narrowing Loans
Penn Virginia Corp. (USD) TL2 L+700 09/29/2022
Roadster Finance (EUR) TL 12/08/2022
Compass IV LTD (EUR) TL E+800 05/09/2026
99 Cents Only Stores (USD) TL PIK L+500 01/13/2022
Comet Bidco LTD (USD) TLB L+500 10/06/2024		 Aimbridge Hospitality LLC (USD) TLB L+375 02/01/2026
Parques Reunidos (EUR) TLB E+750 09/17/2026
Misys LTD (EUR) TLB E+300 06/13/2024
Iliad SA (EUR) TLB E+425 11/09/2026
Vue Intl Bidco PLC (EUR) DD E+475 06/21/2026

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 12/17/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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