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North American Bond Research – December 29, 2020

Posted on December 29, 2020
HIGH YIELD BOND RESEARCH
December 29, 2020
Bond Markets

GLOBAL MARKETS WERE DOWN MOSTLY AS MCCONNELL STOPS THE $2,000 CHECK FROM MOVING FORWARD WHILE PUSHING FORWARD THE $600 CHECK. 10 Year Treasury notes were UP 0.2 bps. S&P -0.22%, Dow  -0.22%, NASDAQ –0.38%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 82.2 MILLION+ CASES AND 1.79 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 20 MILLION+ CASES AND 346000+ 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 4.3% 11/15/2032 +0.5%
  Mattel Inc. 6.2% 10/1/2040 +0.1%
  Oceaneering Intl. Inc. 6% 2/1/2028 +1.6%
  QEP Resources Inc. 5.25% 5/1/2023 +1.2%
  Chesapeake Energy Corp. 8% 1/15/2025 +11.5%
–   Citigroup Inc. VAR% PERP (4) -1.5%
  Vale Overseas LTD 6.25% 8/10/2026 -0.0%
  Teva Pharmaceutical Industries LTD 3.15% 10/1/2026 -2.8%
  T-Mobile USA Inc. 3.5% 4/15/2025 144A -0.0%
  Ford Motor Co. 8.5% 4/21/2023 -0.5%
Broadcom LTD   4.3% 11/15/2032
Citigroup Inc.   VAR% PERP (4)
Vale Overseas LTD   6.25% 8/10/2026
Teva Pharmaceutical Industries LTD   3.15% 10/1/2026
T-Mobile USA Inc.   3.5% 4/15/2025 144A
Ford Motor Co.   8.5% 4/21/2023
Teva Pharmaceutical Finance LLC   6.15% 2/1/2036
Revlon Consumer Products Corp.   6.25% 8/1/2024
Mattel Inc.   6.2% 10/1/2040
Oceaneering Intl. Inc.   6% 2/1/2028
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.00% -0.11% 0.36% 3.04% 8.48% 8.56%
Mining 0.08% 0.32% 8.93% 99.27% 0.20% 0.14%
Construction -0.07% -0.01% 0.71% 3.96% 8.59% 8.53%
Manufacturing 0.02% 0.13% 1.30% 5.95% 7.02% 6.96%
Transportion, Communication, Electric/Gas -0.01% 0.13% 0.99% 6.74% 7.00% 6.95%
Wholesale -0.02% 0.33% 3.11% 4.81% 5.12% 5.18%
Retail 0.00% 0.12% 1.83% 6.77% 7.62% 7.52%
Finance, Insurance, Real-Estate 0.01% 0.07% 1.12% 5.77% 6.39% 6.39%
Services -0.00% 0.14% 1.25% 5.70% 7.16% 7.17%
Public Administration 0.11% 0.13% 1.56% 3.92% 10.84% 10.79%
Energy 0.10% 0.37% 5.81% 84.93% 1.70% 1.66%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 12/29/2020)
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
Unifrax Corp. (USD) TL2 L+850 12/14/2026
NCL Corp. LTD (USD) TLA L+150 01/02/2024
ZEP Inc. (USD) TL L+825 08/11/2025
Jo-Ann Stores Inc. (USD) TL2 L+925 05/02/2024
Securus Technologies Inc. (USD) TL L+450 11/01/2024
Quorum Health Corp. (USD) TL EXIT L+825 04/29/2025
Robertshaw Holdings Corp (USD) TL L+350 02/28/2025
Radio One (USD) TLB L+400 04/18/2023
Fortress Merger Sub Inc. (USD) TL L+400 10/21/2023
Web.com Group Inc. (USD) TL2 L+775 09/17/2026

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 12/29/2020
  • Net negative capital flows into high-yield ETFs & mutual funds
INVESTMENT GRADE BOND RESEARCH
December 29, 2020
Bond Markets

GLOBAL MARKETS WERE DOWN MOSTLY AS MCCONNELL STOPS THE $2,000 CHECK FROM MOVING FORWARD WHILE PUSHING FORWARD THE $600 CHECK. 10 Year Treasury notes were UP 0.2 bps. S&P -0.22%, Dow  -0.22%, NASDAQ –0.38%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 82.2 MILLION+ CASES AND 1.79 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 20 MILLION+ CASES AND 346000+ 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
+   Goldman Sachs Group Inc. 2.6% 2/7/2030 +0.2%
  Broadcom LTD 4.3% 11/15/2032 +0.5%
  Bank of America Corp. VAR% 10/24/2026 +0.1%
  Honeywell Intl. Inc. 0.483% 8/19/2022 +0.0%
  Goldman Sachs Group Inc. FLT% 2/23/2023 +0.3%
–   FS KKR Capital Corp. 3.4% 1/15/2026 -0.6%
  Juniper Networks Inc. 2% 12/10/2030 -0.2%
  CVS Health Corp. 5.05% 3/25/2048 -0.3%
  Anheuser-Busch Inbev Worldwide Inc. 4.5% 6/1/2050 -0.3%
  General Electric Co. 3.625% 5/1/2030 -0.2%
FS KKR Capital Corp.   3.4% 1/15/2026
Gilead Sciences Inc.   4.4% 12/1/2021
Goldman Sachs Group Inc.   2.6% 2/7/2030
Juniper Networks Inc.   2% 12/10/2030
Broadcom LTD   4.3% 11/15/2032
Bank of America Corp.   VAR% 10/24/2026
CVS Health Corp.   5.05% 3/25/2048
Honeywell Intl. Inc.   0.483% 8/19/2022
Goldman Sachs Group Inc.   FLT% 2/23/2023
Goldman Sachs Group Inc.   VAR% 12/9/2026
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.05% 0.12% 1.19% 3.86% 8.99% 8.84%
Construction -0.01% 0.06% 0.58% 3.93% 9.19% 9.01%
Manufacturing -0.09% 0.00% 0.22% 2.01% 9.42% 9.25%
Transportion, Communication, Electric/Gas -0.14% -0.13% 0.34% 2.39% 10.87% 10.58%
Wholesale -0.15% -0.02% 0.77% 3.40% 10.59% 10.52%
Retail -0.16% -0.00% 0.23% 2.13% 10.47% 10.29%
Finance, Insurance, Real-Estate -0.11% -0.02% 0.29% 1.91% 8.22% 8.14%
Services -0.11% 0.00% 0.45% 2.02% 8.86% 8.70%
Public Administration -0.22% 0.06% -0.10% 0.18% 5.15% 5.14%
Energy -0.08% 0.13% 1.49% 4.40% 8.27% 8.12%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]

(None Current 12/29/2020)
Additional Commentary

NEW ISSUANCE WATCH:  No New Issues.
Top Widening Loans Top Narrowing Loans
Unifrax Corp. (USD) TL2 L+850 12/14/2026
NCL Corp. LTD (USD) TLA L+150 01/02/2024
ZEP Inc. (USD) TL L+825 08/11/2025
Jo-Ann Stores Inc. (USD) TL2 L+925 05/02/2024
Securus Technologies Inc. (USD) TL L+450 11/01/2024
Quorum Health Corp. (USD) TL EXIT L+825 04/29/2025
Robertshaw Holdings Corp (USD) TL L+350 02/28/2025
Radio One (USD) TLB L+400 04/18/2023
Fortress Merger Sub Inc. (USD) TL L+400 10/21/2023
Web.com Group Inc. (USD) TL2 L+775 09/17/2026

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 12/29/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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