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North American Bond Research – December 18, 2020

Posted on December 18, 2020
HIGH YIELD BOND RESEARCH
December 18, 2020
Bond Markets

GLOBAL MARKETS WERE DOWN AS TALKS OVER THE $900 BILLION STIMULUS DEAL WAS BOGGED DOWN CONCERNING FED QA PROGRAM AND DEBT CEILING TALKS. 10 Year Treasury notes were UP .9 bps. S&P +0.58%, Dow  +0.49%, NASDAQ +0.84%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 76 MILLION+ CASES AND 1.68 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 17.8 MILLION+ CASES AND 320000+ 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
+   General Motors Co. 5.2% 4/1/2045 +0.8%
  MGM Resorts Intl 6% 3/15/2023 +0.2%
  Citigroup Inc. VAR% PERP (4) +0.3%
  Newfield Exploration Co. 5.625% 7/1/2024 +0.2%
  EnLink Midstream Partners LP 5.45% 6/1/2047 +1.8%
–   T-Mobile USA Inc. 3.5% 4/15/2025 144A -0.1%
  Broadcom LTD 4.75% 4/15/2029 -0.1%
  Broadcom LTD 4.3% 11/15/2032 -0.4%
  Teva Pharmaceutical Industries LTD 4.1% 10/1/2046 -0.9%
  United Continental Hldg Inc. 4.875% 1/15/2025 -0.1%
T-Mobile USA Inc.   3.5% 4/15/2025 144A
Broadcom LTD   4.75% 4/15/2029
Broadcom LTD   4.3% 11/15/2032
General Motors Co.   5.2% 4/1/2045
MGM Resorts Intl   6% 3/15/2023
Citigroup Inc.   VAR% PERP (4)
Teva Pharmaceutical Industries LTD   4.1% 10/1/2046
United Continental Hldg Inc.   4.875% 1/15/2025
Newfield Exploration Co.   5.625% 7/1/2024
Kraft Heinz Co.   3.95% 7/15/2025
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.18% 0.16% 1.26% 2.63% 8.70% 9.07%
Mining 0.19% 0.89% 8.48% 141.16% -1.59% -0.87%
Construction -0.00% -0.02% 1.08% 3.51% 9.15% 9.28%
Manufacturing 0.05% 0.17% 2.03% 5.02% 7.30% 7.81%
Transportion, Communication, Electric/Gas -0.01% 0.09% 1.44% 4.53% 6.70% 7.11%
Wholesale 0.04% 0.10% 2.93% 3.68% 5.57% 6.24%
Retail 0.09% 0.19% 2.75% 5.07% 7.09% 7.66%
Finance, Insurance, Real-Estate 0.02% 0.14% 1.58% 4.09% 6.46% 6.83%
Services 0.01% 0.07% 1.73% 3.78% 7.05% 7.53%
Public Administration 0.20% 0.31% 0.37% 2.56% 10.63% 11.85%
Energy 0.19% 0.86% 7.99% 121.94% 0.29% 1.35%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Live Nation Entertainment Inc. (USD) 3.75% 1/15/2028 (12/17/2020): 500MM Secured Notes, Price at Issuance 100, Yielding 3.75%.

2. Live Nation Entertainment Inc. (USD) 3.75% 1/15/2028 144A (12/17/2020): 500MM Secured Notes, Price at Issuance 100, Yielding 3.75%.

3. Kronos Acquisition Holdings Inc. (USD) 7% 12/31/2027 Reg S (12/17/2020): 525MM Senior Unsecured Notes, Price at Issuance 100, Yielding 7%.

4. Kronos Acquisition Holdings Inc. (USD) 7% 12/31/2027 144A (12/17/2020): 525MM Senior Unsecured Notes, Price at Issuance 100, Yielding 7%.

5. Live Nation Entertainment Inc. (USD) 3.75% 1/15/2028 Reg S (12/17/2020): 500MM Secured Notes, Price at Issuance 100, Yielding 3.75%.

6. Talos Production LLC (USD) 12% 1/15/2026 Reg S (12/17/2020): 500MM Second Lien Notes, Price at Issuance 91, Yielding 14.56%.

7. Antero Resources Corp. (USD) 8.375% 7/15/2026 Reg S (12/17/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 8.38%.

8. Kronos Acquisition Holdings Inc. (USD) 5% 12/31/2026 144A (12/17/2020): 475MM Secured Notes, Price at Issuance 100, Yielding 5%.

9. Kronos Acquisition Holdings Inc. (USD) 5% 12/31/2026 Reg S (12/17/2020): 475MM Secured Notes, Price at Issuance 100, Yielding 5%.

10. Talos Production LLC (USD) 12% 1/15/2026 144A (12/17/2020): 500MM Second Lien Notes, Price at Issuance 91, Yielding 14.56%.

1. Gemini HDPE LLC: $600MM TLB (Ba3/BB)

2. Cloudera Inc.: $500MM TLB (Ba3/BB-)

3. Asurion LLC: $2.087B TLB8

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

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

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

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

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

9. Pointclickcare: $450MM TLB (B1/B+)

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

Additional Commentary

NEW ISSUANCE WATCH:   Live Nation Entertainment Inc.  issued 500 MM in notes. 
Top Widening Loans Top Narrowing Loans
Unifrax Corp. (USD) TL2 L+850 12/14/2026
Flynn Restaurant Group LP (USD) TL2 L+700 06/29/2026
Jo-Ann Stores Inc. (USD) TL2 L+925 05/02/2024
Portillo’s Holdings LLC (USD) TL L+550 11/27/2024
Alterra Mountain (USD) TLB L+450 08/31/2026
Gestamp Automocion (EUR) TLA 01/23/2025
Mitel Networks Corp. (USD) TL L+450 11/30/2025
Hurtigruten Group AS (EUR) TLC E+800 06/16/2023
Distributed Power Inc. (EUR) TL E+800 11/02/2026
Assystem (EUR) TLB E+425 09/28/2024

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 12/18/2020
  • Net negative capital flows into high-yield ETFs & mutual funds
INVESTMENT GRADE BOND RESEARCH
December 18, 2020
Bond Markets

GLOBAL MARKETS WERE DOWN AS TALKS OVER THE $900 BILLION STIMULUS DEAL WAS BOGGED DOWN CONCERNING FED QA PROGRAM AND DEBT CEILING TALKS. 10 Year Treasury notes were UP .9 bps. S&P +0.58%, Dow  +0.49%, NASDAQ +0.84%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 76 MILLION+ CASES AND 1.68 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 17.8 MILLION+ CASES AND 320000+ 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
+   Wells Fargo & Co. 2.5% 3/4/2021 +0.0%
  Verizon Communications Inc. 1.75% 1/20/2031 +0.0%
  Charles Schwab Corp. VAR% PERP (1) +2.3%
  Oracle Corp. 3.6% 4/1/2050 +0.2%
  Hewlett-Packard Co. 6.35% 10/15/2045 +0.5%
–   Intel Corp. 3.4% 3/25/2025 -0.2%
  MPLX LP 1.75% 3/1/2026 -0.0%
  Teck Resources LTD 6.25% 7/15/2041 -0.4%
  BP Capital Markets America Inc. 2.939% 6/4/2051 -0.3%
  Southern Co. 4.4% 7/1/2046 -0.2%
Intel Corp.   3.4% 3/25/2025
MPLX LP   1.75% 3/1/2026
Teck Resources LTD   6.25% 7/15/2041
Wells Fargo & Co.   2.5% 3/4/2021
BP Capital Markets America Inc.   2.939% 6/4/2051
Southern Co.   4.4% 7/1/2046
Verizon Communications Inc.   1.75% 1/20/2031
Flowserve Corp.   4% 11/15/2023
Abbvie Inc.   4.25% 11/21/2049
Intel Corp.   3.9% 3/25/2030
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.02% 0.32% 2.13% 2.85% 8.93% 9.23%
Construction -0.07% 0.11% 1.40% 3.34% 8.58% 8.89%
Manufacturing -0.05% 0.07% 0.87% 1.51% 9.48% 9.62%
Transportion, Communication, Electric/Gas -0.08% 0.09% 1.29% 1.78% 11.01% 11.03%
Wholesale 0.01% 0.11% 1.40% 2.94% 10.27% 10.62%
Retail -0.02% 0.16% 1.03% 1.88% 10.77% 10.93%
Finance, Insurance, Real-Estate -0.06% 0.07% 0.72% 1.47% 8.29% 8.50%
Services -0.05% 0.09% 0.97% 1.44% 8.70% 8.83%
Public Administration -0.02% 0.05% 0.17% 0.14% 5.17% 5.33%
Energy 0.03% 0.39% 2.49% 3.04% 8.12% 8.48%
 
Total returns (non-annualized) by rating, market weighted.
New Issues New Issues [Continued]

(None Current 12/18/2020)
Additional Commentary

NEW ISSUANCE WATCH:  No New Issues.
Top Widening Loans Top Narrowing Loans
Unifrax Corp. (USD) TL2 L+850 12/14/2026
Flynn Restaurant Group LP (USD) TL2 L+700 06/29/2026
Jo-Ann Stores Inc. (USD) TL2 L+925 05/02/2024
Portillo’s Holdings LLC (USD) TL L+550 11/27/2024
Alterra Mountain (USD) TLB L+450 08/31/2026
Gestamp Automocion (EUR) TLA 01/23/2025
Mitel Networks Corp. (USD) TL L+450 11/30/2025
Hurtigruten Group AS (EUR) TLC E+800 06/16/2023
Distributed Power Inc. (EUR) TL E+800 11/02/2026
Assystem (EUR) TLB E+425 09/28/2024

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 12/18/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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