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North American Bond Research – December 21, 2020

Posted on December 21, 2020
HIGH YIELD BOND RESEARCH
December 21, 2020
Bond Markets

GLOBAL MARKETS WERE DOWN AS A NEW STRAIN OF CORONA VIRUS IS BREAKING OUT IN THE UK CAUSING HUGE TRAVEL RESTRICTIONS. VACCINATION CONTINUES AND CONGRESS PASSED A $900 BILLION STIMULUS PACKAGE. 10 Year Treasury notes were UP .9 bps. S&P -0.39%, Dow  +0.12%, NASDAQ +0.10%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 77.6 MILLION+ CASES AND 1.71 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 18.4 MILLION+ CASES AND 326000+ 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
+   QEP Resources Inc. 5.625% 3/1/2026 +25.5%
  QEP Resources Inc. 5.25% 5/1/2023 +13.4%
  Verisign Inc. 5.25% 4/1/2025 +0.8%
  Citigroup Inc. VAR% PERP (4) +0.1%
  Sesi LLC 7.125% 12/15/2021 (1) +3.2%
–   Vale Overseas LTD 6.25% 8/10/2026 -0.2%
  T-Mobile USA Inc. 3.5% 4/15/2025 144A -0.1%
  Occidental Petroleum Corp. 6.125% 1/1/2031 -1.1%
  Community Health Systems Inc. 6.25% 3/31/2023 -0.0%
  Occidental Petroleum Corp. 2.9% 8/15/2024 -0.6%
QEP Resources Inc.   5.625% 3/1/2026
Vale Overseas LTD   6.25% 8/10/2026
QEP Resources Inc.   5.25% 5/1/2023
T-Mobile USA Inc.   3.5% 4/15/2025 144A
Occidental Petroleum Corp.   6.125% 1/1/2031
Verisign Inc.   5.25% 4/1/2025
Community Health Systems Inc.   6.25% 3/31/2023
Citigroup Inc.   VAR% PERP (4)
Sesi LLC   7.125% 12/15/2021 (1)
Occidental Petroleum Corp.   2.9% 8/15/2024
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.12% 0.14% 1.09% 2.42% 8.57% 8.89%
Mining -0.03% 0.77% 8.12% 140.42% -1.81% -1.38%
Construction -0.06% 0.06% 0.68% 3.52% 8.77% 8.80%
Manufacturing -0.09% 0.26% 1.83% 4.68% 7.29% 7.62%
Transportion, Communication, Electric/Gas -0.09% 0.10% 1.33% 5.31% 6.81% 7.16%
Wholesale -0.12% 0.21% 2.44% 3.58% 5.27% 5.70%
Retail -0.11% 0.28% 2.51% 4.96% 7.11% 7.57%
Finance, Insurance, Real-Estate -0.09% 0.13% 1.47% 4.61% 6.25% 6.54%
Services -0.09% 0.18% 1.69% 3.85% 6.97% 7.35%
Public Administration 0.02% 0.40% 1.56% 2.65% 10.65% 11.74%
Energy -0.03% 0.79% 7.63% 121.69% 0.20% 0.73%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 12/21/2020)
1. Unified Women’s Healthcare LP: $560MM TLs: $420MM TLB (B-); $140MM TL

2. Syncapay: $500MM credut facilities (B2/B): $50MM revolver; $450MM TLB

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

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

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

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

7. Asurion LLC: $2.087B TLB8

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

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

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

Additional Commentary

NEW ISSUANCE WATCH:  No New Issues. 
Top Widening Loans Top Narrowing Loans
Penn Virginia Corp. (USD) TL2 L+700 09/29/2022
Aernnova Aerospace SA (EUR) TLB E+300 01/31/2027
Bison Midstream Holdings LLC (USD) RC 05/29/2023
Mitel Networks Corp. (USD) TL L+450 11/30/2025
Hurtigruten Group AS (EUR) TLC E+800 06/16/2023
Conduent Business Services LLC (USD) TLB L+250 12/07/2023
Garrett Motion (USD) TLB L+250 09/27/2025
LA Fitness PLC (USD) TLA L+225 01/08/2025
Deoleo SA (EUR) TLB 06/24/2025
99 Cents Only Stores (USD) TL PIK L+500 01/13/2022

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 12/21/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
December 21, 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 77.6 MILLION+ CASES AND 1.71 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 18.4 MILLION+ CASES AND 326000+ 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
+   Bank of Montreal FLT% 8/27/2021 +0.0%
  Dowdupont Inc. 5.419% 11/15/2048 +1.0%
  Pfizer Inc. 2.2% 12/15/2021 +0.1%
  Montpelier RE Hldg LTD 4.7% 10/15/2022 +0.2%
  JPMorgan Chase & Co. FLT% 1/10/2025 +0.1%
–   Alphabet Inc. 2.25% 8/15/2060 -0.3%
  Abbvie Inc. 2.95% 11/21/2026 144A -0.3%
  Waste Management Inc. 1.15% 3/15/2028 -0.2%
  Capital One Financial Corp. 3.45% 4/30/2021 -0.0%
  Verizon Communications Inc. 2.875% 11/20/2050 -0.5%
Alphabet Inc.   2.25% 8/15/2060
Abbvie Inc.   2.95% 11/21/2026 144A
Waste Management Inc.   1.15% 3/15/2028
Capital One Financial Corp.   3.45% 4/30/2021
Verizon Communications Inc.   2.875% 11/20/2050
Bank of Montreal   FLT% 8/27/2021
Boeing Co.   5.805% 5/1/2050
Nasdaq Inc.   1.65% 1/15/2031
Dowdupont Inc.   5.419% 11/15/2048
Verizon Communications Inc.   2.65% 11/20/2040
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.08% 0.19% 1.86% 2.91% 8.99% 9.40%
Construction -0.10% 0.08% 1.17% 3.37% 8.89% 9.23%
Manufacturing -0.17% -0.09% 0.57% 1.45% 9.40% 9.73%
Transportion, Communication, Electric/Gas -0.17% -0.15% 0.98% 1.81% 10.97% 11.23%
Wholesale -0.14% 0.03% 1.17% 2.70% 10.38% 10.84%
Retail -0.23% -0.10% 0.64% 1.78% 10.69% 11.06%
Finance, Insurance, Real-Estate -0.13% -0.03% 0.55% 1.42% 8.17% 8.48%
Services -0.16% -0.04% 0.74% 1.45% 8.68% 8.98%
Public Administration 0.01% 0.02% 0.21% 0.28% 5.24% 5.43%
Energy -0.09% 0.29% 2.16% 3.15% 8.16% 8.61%
 
Total returns (non-annualized) by rating, market weighted.
New Issues New Issues [Continued]

(None Current 12/21/2020)
Additional Commentary

NEW ISSUANCE WATCH:  No New Issues.
Top Widening Loans Top Narrowing Loans
Penn Virginia Corp. (USD) TL2 L+700 09/29/2022
Aernnova Aerospace SA (EUR) TLB E+300 01/31/2027
Bison Midstream Holdings LLC (USD) RC 05/29/2023
Mitel Networks Corp. (USD) TL L+450 11/30/2025
Hurtigruten Group AS (EUR) TLC E+800 06/16/2023
Conduent Business Services LLC (USD) TLB L+250 12/07/2023
Garrett Motion (USD) TLB L+250 09/27/2025
LA Fitness PLC (USD) TLA L+225 01/08/2025
Deoleo SA (EUR) TLB 06/24/2025
99 Cents Only Stores (USD) TL PIK L+500 01/13/2022

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 12/21/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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