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North American Bond Research – December 22, 2020

Posted on December 22, 2020
HIGH YIELD BOND RESEARCH
December 22, 2020
Bond Markets

GLOBAL MARKETS WERE MIXED TO HIGHER AS THE SENATE PASSED THE $900 BILLION STIMULUS PACKAGE. THE VIRUS IS STILL RAGING AS VACCINES ARE BEING DISTRIBUTED AND THEY ARE TESTING IF IT CAN STOP THE NEW UK STRAIN. 10 Year Treasury notes were DOWN 2.1 bps. S&P -0.21%, Dow  -0.67%, NASDAQ +0.51%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 78.3 MILLION+ CASES AND 1.72 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 18.63 MILLION+ CASES AND 330000+ 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
+   Broadcom LTD 4.7% 4/15/2025 +0.2%
  Expedia Inc. 4.5% 8/15/2024 +1.7%
  Vale Overseas LTD 6.25% 8/10/2026 +0.3%
  Broadcom LTD 4.75% 4/15/2029 +0.5%
  American Axle & Manufacturing Inc. 6.875% 7/1/2028 +0.3%
–   Dish DBS Corp. 7.75% 7/1/2026 -0.8%
  Teva Pharmaceutical Industries LTD 3.15% 10/1/2026 -0.9%
  QEP Resources Inc. 5.625% 3/1/2026 -1.4%
  Plains All American Pipeline LP VAR% PERP -1.8%
  Expedia Group Inc. 6.25% 5/1/2025 Reg S -0.2%
Broadcom LTD   4.7% 4/15/2025
Expedia Inc.   4.5% 8/15/2024
Vale Overseas LTD   6.25% 8/10/2026
Broadcom LTD   4.75% 4/15/2029
American Axle & Manufacturing Inc.   6.875% 7/1/2028
OneMain Financial Hldg Inc.   4% 9/15/2030
Dish DBS Corp.   7.75% 7/1/2026
Teva Pharmaceutical Industries LTD   3.15% 10/1/2026
Constellation Brands Inc.   4.25% 5/1/2023
Ally Financial Inc.   3.875% 5/21/2024
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.10% 0.06% 0.77% 2.35% 8.51% 8.69%
Mining -0.30% 0.36% 7.52% 91.31% -0.10% 0.13%
Construction -0.13% 0.03% 0.82% 3.80% 9.34% 9.33%
Manufacturing -0.20% 0.16% 1.69% 5.36% 7.18% 7.33%
Transportion, Communication, Electric/Gas -0.18% -0.03% 1.11% 5.52% 6.88% 7.08%
Wholesale -0.16% 0.02% 3.39% 3.79% 4.54% 4.77%
Retail -0.22% 0.05% 2.40% 5.72% 7.52% 7.76%
Finance, Insurance, Real-Estate -0.11% 0.05% 1.27% 4.85% 6.24% 6.38%
Services -0.16% 0.01% 1.51% 4.33% 6.98% 7.13%
Public Administration 0.02% 0.13% 1.28% 3.22% 10.71% 11.74%
Energy -0.32% 0.34% 7.07% 79.48% 1.51% 1.80%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 12/22/2020)
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
Auris Luxembourg III SA (EUR) TL E+675 02/21/2027
Garrett Motion (USD) TLB L+250 09/27/2025
Natel Engineering Co. Inc. (USD) TLB L+500 04/30/2026
Caldic (EUR) TL 07/18/2025
Optiv Security Inc. (USD) TL2 L+725 02/01/2025
Ligado Networks LLC (USD) TL L+1600 05/27/2023
Hexion Inc. (EUR) TLB EXT E+400 07/01/2026
Securus Technologies Inc. (USD) TL L+450 11/01/2024
Tecomet Inc. (USD) TL L+350 05/01/2024
Encino (USD) TL2 L+675 11/20/2025

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 17 bps (basis points), as of 12/22/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
December 22, 2020
Bond Markets

GLOBAL MARKETS WERE MIXED TO HIGHER AS THE SENATE PASSED THE $900 BILLION STIMULUS PACKAGE. THE VIRUS IS STILL RAGING AS VACCINES ARE BEING DISTRIBUTED AND THEY ARE TESTING IF IT CAN STOP THE NEW UK STRAIN. 10 Year Treasury notes were DOWN 2.1 bps. S&P -0.21%, Dow  -0.67%, NASDAQ +0.51%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 78.3 MILLION+ CASES AND 1.72 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 18.63 MILLION+ CASES AND 330000+ 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
+   Verizon Communications Inc. 1.75% 1/20/2031 +0.0%
  Boeing Co. 3.625% 2/1/2031 +0.9%
  Boeing Co. 5.805% 5/1/2050 +0.8%
  CI Financial Corp. 3.2% 12/17/2030 +0.2%
  B.A.T. Capital Corp. 2.259% 3/25/2028 +0.5%
–   Verizon Communications Inc. 2.875% 11/20/2050 -1.2%
  Verizon Communications Inc. 3% 11/20/2060 -1.6%
  Simon Property Group Inc. 3.375% 6/15/2027 -0.0%
  AT&T Inc. 2.75% 6/1/2031 -0.2%
  FS KKR Capital Corp. 3.4% 1/15/2026 -0.0%
Verizon Communications Inc.   2.875% 11/20/2050
Verizon Communications Inc.   1.75% 1/20/2031
Verizon Communications Inc.   3% 11/20/2060
Simon Property Group Inc.   3.375% 6/15/2027
Boeing Co.   3.625% 2/1/2031
Boeing Co.   5.805% 5/1/2050
AT&T Inc.   2.75% 6/1/2031
CI Financial Corp.   3.2% 12/17/2030
B.A.T. Capital Corp.   2.259% 3/25/2028
FS KKR Capital Corp.   3.4% 1/15/2026
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.30% -0.09% 1.10% 2.92% 8.90% 9.17%
Construction -0.19% -0.16% 0.69% 3.59% 8.98% 9.30%
Manufacturing -0.19% -0.20% 0.07% 1.49% 9.25% 9.52%
Transportion, Communication, Electric/Gas -0.17% -0.20% 0.27% 1.84% 10.90% 11.12%
Wholesale -0.12% -0.06% 0.83% 2.87% 10.60% 10.91%
Retail -0.20% -0.15% -0.00% 1.79% 10.62% 10.86%
Finance, Insurance, Real-Estate -0.17% -0.10% 0.19% 1.45% 8.13% 8.38%
Services -0.20% -0.13% 0.20% 1.44% 8.68% 8.94%
Public Administration -0.25% -0.09% -0.11% -0.02% 5.10% 5.24%
Energy -0.26% 0.06% 1.47% 3.17% 8.01% 8.30%
 
Total returns (non-annualized) by rating, market weighted.
New Issues New Issues [Continued]

(None Current 12/22/2020)
Additional Commentary

NEW ISSUANCE WATCH:  No New Issues.
Top Widening Loans Top Narrowing Loans
Auris Luxembourg III SA (EUR) TL E+675 02/21/2027
Garrett Motion (USD) TLB L+250 09/27/2025
Natel Engineering Co. Inc. (USD) TLB L+500 04/30/2026
Caldic (EUR) TL 07/18/2025
Optiv Security Inc. (USD) TL2 L+725 02/01/2025
Ligado Networks LLC (USD) TL L+1600 05/27/2023
Hexion Inc. (EUR) TLB EXT E+400 07/01/2026
Securus Technologies Inc. (USD) TL L+450 11/01/2024
Tecomet Inc. (USD) TL L+350 05/01/2024
Encino (USD) TL2 L+675 11/20/2025

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 17 bps (basis points), as of 12/22/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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