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North American Bond Research – December 23, 2020

Posted on December 23, 2020
HIGH YIELD BOND RESEARCH
December 23, 2020
Bond Markets

GLOBAL MARKETS WERE HIGHER AS PRESIDENT TRUMP VETOED THE DEFENSE BILL AND THREATENED TO VETO THE COVID STIMULUS BILL BECAUSE THE INDIVIDUAL CHECKS WERE NOT ENOUGH. 10 Year Treasury notes were UP 3.7 bps. S&P +0.07%,  Dow +0.38%, NASDAQ -0.29%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 79 MILLION+ CASES AND 1.74 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 18.86 MILLION+ CASES AND 333000+ 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
+   Citigroup Inc. VAR% PERP (4) +2.1%
  Occidental Petroleum Corp. 3.4% 4/15/2026 +0.5%
  Buckeye Partners LP 3.95% 12/1/2026 +1.4%
  BED Bath & Beyond Inc. 5.165% 8/1/2044 +0.8%
  Occidental Petroleum Corp. 4.4% 8/15/2049 +1.3%
–   Expedia Inc. 4.5% 8/15/2024 -0.4%
  T-Mobile USA Inc. 1.5% 2/15/2026 Reg S -0.7%
  Western Digital Corp. 4.75% 2/15/2026 -0.2%
  Occidental Petroleum Corp. 3.5% 6/15/2025 -2.3%
  Pacific Gas & Electric Co. 4.6% 6/15/2043 -0.6%
Citigroup Inc.   VAR% PERP (4)
Occidental Petroleum Corp.   3.4% 4/15/2026
Expedia Inc.   4.5% 8/15/2024
T-Mobile USA Inc.   1.5% 2/15/2026 Reg S
Buckeye Partners LP   3.95% 12/1/2026
BED Bath & Beyond Inc.   5.165% 8/1/2044
Occidental Petroleum Corp.   4.4% 8/15/2049
Frontier Communications Corp.   11% 9/15/2025
General Motors Financial Co. Inc.   5.75% PERP
Western Digital Corp.   4.75% 2/15/2026
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.16% -0.06% 0.72% 2.64% 8.42% 8.59%
Mining -0.02% 0.25% 7.46% 91.05% 0.19% 0.42%
Construction -0.10% -0.05% 0.74% 3.86% 9.31% 9.30%
Manufacturing -0.09% 0.07% 1.57% 5.32% 7.26% 7.39%
Transportion, Communication, Electric/Gas -0.07% -0.10% 1.16% 5.76% 7.25% 7.45%
Wholesale -0.04% -0.07% 2.89% 4.07% 5.00% 5.23%
Retail -0.10% 0.03% 2.44% 5.99% 7.46% 7.67%
Finance, Insurance, Real-Estate -0.06% 0.06% 1.26% 4.60% 6.73% 6.86%
Services -0.11% -0.06% 1.46% 4.57% 6.88% 7.01%
Public Administration -0.16% 0.22% 1.10% 2.93% 10.52% 11.54%
Energy 0.03% 0.29% 7.19% 79.60% 1.81% 2.10%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 12/23/2020)
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
Affinion Group Inc. (USD) TL L+775 05/10/2022
Unifrax Corp. (USD) TL2 L+850 12/14/2026
Ahlsell AB (EUR) TL E+825 03/01/2027
CPV Shore LLC (USD) TLB L+375 12/27/2025
Conduent Business Services LLC (USD) TLB L+250 12/07/2023
Optiv Security Inc. (USD) TL2 L+725 02/01/2025
Euskaltel SA (EUR) TLB E+325 06/03/2022
Unifrax Corp. (USD) TLB L+375 12/14/2025
Cambrex Corp. (EUR) TL E+900 12/04/2027
Securus Technologies Inc. (USD) TL L+450 11/01/2024

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 12/23/2020
  • Net negative capital flows into high-yield ETFs & mutual funds
INVESTMENT GRADE BOND RESEARCH
December 23, 2020
Bond Markets

GLOBAL MARKETS WERE HIGHER AS PRESIDENT TRUMP VETOED THE DEFENSE BILL AND THREATENED TO VETO THE COVID STIMULUS BILL BECAUSE THE INDIVIDUAL CHECKS WERE NOT ENOUGH. 10 Year Treasury notes were UP 3.7 bps. S&P +0.07%, Dow  +0.38%, NASDAQ -0.29%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 79 MILLION+ CASES AND 1.74 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 18.86 MILLION+ CASES AND 333000+ 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
+   Oracle Corp. 2.5% 4/1/2025 +0.1%
  PACCAR Financial Corp. 3.4% 8/6/2023 +0.2%
  Toyota Motor Credit Corp. FLT% 12/13/2021 +0.0%
  Gilead Sciences Inc. 4.75% 3/1/2046 +0.5%
  CVS Health Corp. 1.875% 2/28/2031 +0.3%
–   Anheuser-Busch Inbev Worldwide Inc. 4.6% 4/15/2048 -0.2%
  Dupont de Nemours Inc. 2.169% 5/1/2023 -0.0%
  Boeing Co. 4.875% 5/1/2025 -1.3%
  Prudential Financial Inc. VAR% 10/1/2050 -0.1%
  PayPal Hldg Inc. 2.3% 6/1/2030 -0.3%
Anheuser-Busch Inbev Worldwide Inc.   4.6% 4/15/2048
Oracle Corp.   2.5% 4/1/2025
Dupont de Nemours Inc.   2.169% 5/1/2023
PACCAR Financial Corp.   3.4% 8/6/2023
Toyota Motor Credit Corp.   FLT% 12/13/2021
Boeing Co.   4.875% 5/1/2025
Prudential Financial Inc.   VAR% 10/1/2050
Gilead Sciences Inc.   4.75% 3/1/2046
CVS Health Corp.   1.875% 2/28/2031
Thermo Fisher Scientific Inc.   2.95% 9/19/2026
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.06% 0.13% 1.32% 3.17% 9.12% 9.38%
Construction 0.03% 0.01% 0.77% 3.63% 9.26% 9.56%
Manufacturing 0.06% -0.01% 0.22% 1.63% 9.53% 9.79%
Transportion, Communication, Electric/Gas 0.03% -0.00% 0.40% 1.96% 11.12% 11.32%
Wholesale 0.06% 0.10% 0.97% 3.04% 10.86% 11.17%
Retail 0.09% 0.09% 0.26% 1.96% 10.66% 10.89%
Finance, Insurance, Real-Estate 0.03% 0.02% 0.32% 1.63% 8.33% 8.57%
Services 0.04% 0.03% 0.38% 1.61% 9.02% 9.27%
Public Administration 0.28% 0.02% 0.15% 0.38% 5.22% 5.35%
Energy 0.07% 0.27% 1.66% 3.52% 8.29% 8.56%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]

(None Current 12/23/2020)
Additional Commentary

NEW ISSUANCE WATCH:  No New Issues.
Top Widening Loans Top Narrowing Loans
Affinion Group Inc. (USD) TL L+775 05/10/2022
Unifrax Corp. (USD) TL2 L+850 12/14/2026
Ahlsell AB (EUR) TL E+825 03/01/2027
CPV Shore LLC (USD) TLB L+375 12/27/2025
Conduent Business Services LLC (USD) TLB L+250 12/07/2023
Optiv Security Inc. (USD) TL2 L+725 02/01/2025
Euskaltel SA (EUR) TLB E+325 06/03/2022
Unifrax Corp. (USD) TLB L+375 12/14/2025
Cambrex Corp. (EUR) TL E+900 12/04/2027
Securus Technologies Inc. (USD) TL L+450 11/01/2024

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 12/23/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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