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North American Bond Research – December 30, 2020

Posted on December 30, 2020
HIGH YIELD BOND RESEARCH
December 30, 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 DOWN 0.9 bps. S&P +0.13%, Dow  +0.24%, NASDAQ +.15%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 83 MILLION+ CASES AND 1.81 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 20.2 MILLION+ CASES AND 350000+ 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
+   Cheniere Corpus Christi Hldgs LLC 5.125% 6/30/2027 +0.1%
  BED Bath & Beyond Inc. 5.165% 8/1/2044 +0.8%
  Occidental Petroleum Corp. 6.125% 1/1/2031 +0.5%
  Micron Technology Inc. 4.663% 2/15/2030 +0.3%
  Macys Retail Hldg Inc. 7% 2/15/2028 +1.2%
–   Goldman Sachs Group Inc. 5% PERP -0.2%
  Macy’s Retail Hldg Inc. 3.625% 6/1/2024 -0.1%
  Occidental Petroleum Corp. 5.5% 12/1/2025 -0.5%
  Dish DBS Corp. 5.875% 11/15/2024 -0.8%
  T-Mobile USA Inc. 3.5% 4/15/2025 144A -0.1%
Cheniere Corpus Christi Hldgs LLC   5.125% 6/30/2027
Netflix Inc.   5.875% 11/15/2028
BED Bath & Beyond Inc.   5.165% 8/1/2044
Goldman Sachs Group Inc.   5% PERP
Occidental Petroleum Corp.   6.125% 1/1/2031
Macy’s Retail Hldg Inc.   3.625% 6/1/2024
Occidental Petroleum Corp.   5.5% 12/1/2025
Dish DBS Corp.   5.875% 11/15/2024
Micron Technology Inc.   4.663% 2/15/2030
Macys Retail Hldg Inc.   7% 2/15/2028
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.03% 0.15% 0.49% 3.27% 8.61% 8.69%
Mining 0.09% 0.54% 9.39% 97.14% -0.41% -0.50%
Construction 0.00% 0.22% 0.72% 4.02% 8.80% 8.72%
Manufacturing 0.02% 0.32% 1.38% 5.92% 7.35% 7.29%
Transportion, Communication, Electric/Gas 0.03% 0.28% 1.13% 6.72% 7.30% 7.24%
Wholesale -0.00% 0.40% 3.25% 4.88% 5.14% 5.18%
Retail 0.09% 0.38% 2.06% 6.94% 7.71% 7.60%
Finance, Insurance, Real-Estate 0.03% 0.29% 1.17% 5.73% 6.44% 6.44%
Services 0.06% 0.43% 1.45% 5.74% 7.40% 7.40%
Public Administration 0.02% 0.31% 1.56% 3.92% 10.86% 10.79%
Energy 0.04% 0.49% 6.10% 83.34% 1.12% 1.06%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 12/30/2020)
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
Rodan & Fields LLC (USD) TLB L+400 06/07/2025
Casmar Holdings Australia PTY LTD (USD) TLB L+450 12/07/2023
Archroma Global Services (EUR) TLB1 E+400 07/28/2024
Arbor Pharmaceuticals LLC (USD) TLB L+500 07/05/2023
Sunrise Medical Inc. (EUR) TLB E+350 04/10/2025
Quorum Health Corp. (USD) TL EXIT L+825 04/29/2025
Fortress Merger Sub Inc. (USD) TL L+400 10/21/2023
Wittur (EUR) TL E+850 09/19/2027
Fortress Merger Sub Inc. (USD) TL2 L+850 10/21/2024

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 17 bps (basis points), as of 12/30/2020
  • Net negative capital flows into high-yield ETFs & mutual funds
INVESTMENT GRADE BOND RESEARCH
December 30, 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 DOWN 0.9 bps. S&P +0.13%, Dow  +0.24%, NASDAQ +.15%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 83 MILLION+ CASES AND 1.81 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 20.2 MILLION+ CASES AND 350000+ 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
+   The Travelers Companies Inc. 4.6% 8/1/2043 +4.1%
  Citigroup Inc. 2.9% 12/8/2021 +0.2%
  CVS Health Corp. 4.3% 3/25/2028 +0.4%
  Pioneer Natural Resources Co. 1.9% 8/15/2030 +0.3%
  Goldman Sachs Group Inc. VAR% 12/9/2026 +0.0%
–   Dupont de Nemours Inc. 2.169% 5/1/2023 -0.1%
  Gilead Sciences Inc. 4.4% 12/1/2021 -0.0%
  Duke Energy Corp. 2.45% 6/1/2030 -0.5%
  Intel Corp. 4.6% 3/25/2040 -0.8%
  Comcast Corp. 2.45% 8/15/2052 -1.6%
The Travelers Companies Inc.   4.6% 8/1/2043
Citigroup Inc.   2.9% 12/8/2021
CVS Health Corp.   4.3% 3/25/2028
Pioneer Natural Resources Co.   1.9% 8/15/2030
Dupont de Nemours Inc.   2.169% 5/1/2023
Goldman Sachs Group Inc.   VAR% 12/9/2026
Hewlett-Packard Co.   6.35% 10/15/2045
Gilead Sciences Inc.   4.4% 12/1/2021
Pfizer Inc.   2.2% 12/15/2021
Bank of America Corp.   VAR% 10/24/2031
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.04% 0.20% 1.39% 4.19% 9.28% 9.12%
Construction -0.20% -0.05% 0.48% 3.55% 9.39% 9.19%
Manufacturing 0.01% 0.04% 0.33% 2.01% 9.54% 9.37%
Transportion, Communication, Electric/Gas -0.05% -0.07% 0.42% 2.39% 10.90% 10.61%
Wholesale -0.03% 0.04% 0.85% 3.38% 10.81% 10.73%
Retail 0.07% 0.12% 0.42% 2.49% 11.11% 10.91%
Finance, Insurance, Real-Estate 0.01% 0.03% 0.39% 1.86% 8.26% 8.18%
Services 0.00% 0.07% 0.54% 2.00% 9.09% 8.92%
Public Administration 0.25% 0.01% 0.14% 0.13% 5.46% 5.44%
Energy -0.01% 0.16% 1.59% 4.50% 8.45% 8.28%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]

(None Current 12/30/2020)
Additional Commentary

NEW ISSUANCE WATCH:  No New Issues.
Top Widening Loans Top Narrowing Loans
Penn Virginia Corp. (USD) TL2 L+700 09/29/2022
Rodan & Fields LLC (USD) TLB L+400 06/07/2025
Casmar Holdings Australia PTY LTD (USD) TLB L+450 12/07/2023
Archroma Global Services (EUR) TLB1 E+400 07/28/2024
Arbor Pharmaceuticals LLC (USD) TLB L+500 07/05/2023
Sunrise Medical Inc. (EUR) TLB E+350 04/10/2025
Quorum Health Corp. (USD) TL EXIT L+825 04/29/2025
Fortress Merger Sub Inc. (USD) TL L+400 10/21/2023
Wittur (EUR) TL E+850 09/19/2027
Fortress Merger Sub Inc. (USD) TL2 L+850 10/21/2024

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 17 bps (basis points), as of 12/30/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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