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North American Bond Research – December 7, 2020

Posted on December 7, 2020
HIGH YIELD BOND RESEARCH
December 7, 2020
Bond Markets

GLOBAL MARKETS ARE DOWN AS COVID CASES RISE. ALSO PUTTING PRESSURE ON THE MARKETS IS THE STATUS OF WHETHER THERE WILL BE A STIMULUS PACKAGE AND HOW BIG WILL IT BE? GLOBAL SOVEREIGNS ALSO WERE UNIVERSALLY DOWN.  10 Year Treasury notes were DOWN 4.1bps. S&P -0.19%, Dow -0.49%, NASDAQ +0.45%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 67.86 MILLION+ CASES AND 1.55 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 15.3 MILLION+ CASES AND 290000+ 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
+   T-Mobile USA Inc. 3.5% 4/15/2025 144A +0.1%
  Delta Airlines Inc. 3.625% 3/15/2022 +0.3%
  Hertz Corp. 6.25% 10/15/2022 +4.3%
  EnLink Midstream Partners LP 5.375% 6/1/2029 +0.5%
  Pacific Gas & Electric Co. 4.95% 7/1/2050 +0.5%
–   HCA Inc. 3.5% 9/1/2030 -0.1%
  Ford Motor Co. 8.5% 4/21/2023 -0.1%
  EQT Corp. 3.9% 10/1/2027 -0.8%
  Petrobras Global Finance BV 6.85% 6/5/2115 -0.4%
  General Motors Co. 5.2% 4/1/2045 -0.3%
T-Mobile USA Inc.   3.5% 4/15/2025 144A
HCA Inc.   3.5% 9/1/2030
Ford Motor Co.   8.5% 4/21/2023
EQT Corp.   3.9% 10/1/2027
Petrobras Global Finance BV   6.85% 6/5/2115
Delta Airlines Inc.   3.625% 3/15/2022
General Motors Co.   5.2% 4/1/2045
Hertz Corp.   6.25% 10/15/2022
EnLink Midstream Partners LP   5.375% 6/1/2029
Pacific Gas & Electric Co.   4.95% 7/1/2050
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.01% 0.30% 1.94% 1.97% 7.23% 8.91%
Mining 0.35% 1.52% 8.88% 69.86% -3.42% 0.09%
Construction -0.06% 0.26% 2.16% 4.06% 8.67% 9.46%
Manufacturing 0.04% 0.65% 3.22% 4.65% 6.61% 8.14%
Transportion, Communication, Electric/Gas -0.02% 0.49% 2.49% 3.79% 6.43% 7.88%
Wholesale 0.02% 0.38% 2.47% 2.35% 4.75% 6.59%
Retail 0.07% 0.90% 4.02% 5.27% 6.81% 8.46%
Finance, Insurance, Real-Estate 0.01% 0.55% 2.66% 3.84% 5.98% 7.49%
Services 0.06% 0.63% 3.43% 3.62% 6.44% 8.34%
Public Administration 0.02% 0.49% 1.75% 2.66% 9.69% 11.29%
Energy 0.33% 1.65% 8.46% 60.85% -1.32% 2.60%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 12/07/2020)
1. Adtalem: $1.4B credit facilities: $400MM revolver; $1B TLB

2. Unified Women’s Healthcare LP: $560MM TLs: $420MM TLB (B-); $140MM TL

3. Railworks: $280MM credit facilities: $230MM TLB; $50MM revolver

4. Provation Software Group Inc.: $330MM TLs: $250MM TL; $80MM TL2

5. Exgen Renewables IV LLC: $750MM TLB (Ba3/BB-)

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

7. Zaxby’s Operating Co LP: $975MM credit facilities: $100MM revolver; $625MM TLB; $250MM TL

8. Zaxby’s Operating Co LP: $975MM credit facilities: $100MM revolver; $625MM TLB; $250MM TL

9. Service King Collision Repair Centers: $700MM TLB

10. Railworks: $280MM credit facilities: $230MM TLB; $50MM revolver

Additional Commentary

NEW ISSUANCE WATCH: No new Issues.
Top Widening Loans Top Narrowing Loans
Areas SA (EUR) TL 07/01/2026
Stubhub (USD) TLB L+350 02/13/2027
Aptean Inc. (USD) TL L+850 04/24/2027
Shutterfly Inc. (USD) TLB L+650 10/02/2026
Spectrum Plastics (USD) TL L+700 01/31/2026
MedPlast Inc. (USD) TL2 L+775 07/02/2026
Quorum Health Corp. (USD) TL EXIT L+825 04/29/2025
Dental Corp. (USD) TL2 L+750 06/06/2026
Pfleiderer AG (EUR) TLB E+500 04/13/2024
Casper Bidco (EUR) TL E+850 07/30/2027

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 15 bps (basis points), as of 12/07/2020
  • Net negative capital flows into high-yield ETFs & mutual funds
INVESTMENT GRADE BOND RESEARCH
December 7, 2020
Bond Markets

GLOBAL MARKETS ARE DOWN AS COVID CASES RISE. ALSO PUTTING PRESSURE ON THE MARKETS IS THE STATUS OF WHETHER THERE WILL BE A STIMULUS PACKAGE AND HOW BIG WILL IT BE? GLOBAL SOVEREIGNS ALSO WERE UNIVERSIALLY DOWN.  10 Year Treasury notes were DOWN 4.1bps. S&P -0.19%, Dow -0.49%, NASDAQ +0.45%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 66.1 MILLION+ CASES AND 1.52 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 14.7 MILLION+ CASES AND 285000+ 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
+   CVS Health Corp. 4.3% 3/25/2028 +0.6%
  UnitedHealth Group Inc. 3.7% 8/15/2049 +0.2%
  Verizon Communications Inc. 2.875% 11/20/2050 +0.4%
  CVS Health Corp. 1.3% 8/21/2027 +0.0%
  UnitedHealth Group Inc. 2.9% 5/15/2050 +0.3%
–   ANZ Banking Group LTD 2.05% 11/21/2022 -0.1%
  General Electric Co. FLT% PERP (1) -1.5%
  United Parcel Service Inc. 3.125% 1/15/2021 -0.1%
  Morgan Stanley 2.188% 4/28/2026 -0.2%
  FS KKR Capital Corp. 3.4% 1/15/2026 -1.4%
CVS Health Corp.   4.3% 3/25/2028
ANZ Banking Group LTD   2.05% 11/21/2022
UnitedHealth Group Inc.   3.7% 8/15/2049
Verizon Communications Inc.   2.875% 11/20/2050
CVS Health Corp.   1.3% 8/21/2027
UnitedHealth Group Inc.   2.9% 5/15/2050
Banco Santander SA   2.749% 12/3/2030
Exxon Mobil Corp.   3.452% 4/15/2051
Verizon Communications Inc.   2.65% 11/20/2040
Verizon Communications Inc.   1.75% 1/20/2031
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.12% 0.54% 2.91% 2.57% 8.21% 8.77%
Construction -0.01% 0.17% 2.55% 4.57% 8.48% 8.74%
Manufacturing -0.23% 0.08% 1.35% 1.91% 9.21% 9.42%
Transportion, Communication, Electric/Gas -0.22% 0.10% 1.94% 1.91% 10.60% 10.76%
Wholesale -0.13% 0.32% 1.83% 3.10% 10.11% 10.72%
Retail -0.41% -0.06% 1.42% 2.02% 10.54% 10.73%
Finance, Insurance, Real-Estate -0.15% 0.10% 1.05% 1.59% 7.88% 8.14%
Services -0.26% 0.15% 1.40% 1.80% 8.62% 8.75%
Public Administration 0.01% -0.01% 0.07% 0.08% 5.18% 5.06%
Energy -0.10% 0.66% 3.47% 2.56% 7.35% 8.37%
 
Total returns (non-annualized) by rating, market weighted.
New Issues New Issues [Continued]

(None Current 12/07/2020)
Additional Commentary

NEW ISSUANCE WATCH:  No New Issues.
Top Widening Loans Top Narrowing Loans
Areas SA (EUR) TL 07/01/2026
Stubhub (USD) TLB L+350 02/13/2027
Aptean Inc. (USD) TL L+850 04/24/2027
Shutterfly Inc. (USD) TLB L+650 10/02/2026
Spectrum Plastics (USD) TL L+700 01/31/2026
MedPlast Inc. (USD) TL2 L+775 07/02/2026
Quorum Health Corp. (USD) TL EXIT L+825 04/29/2025
Dental Corp. (USD) TL2 L+750 06/06/2026
Pfleiderer AG (EUR) TLB E+500 04/13/2024
Casper Bidco (EUR) TL E+850 07/30/2027

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 15 bps (basis points), as of 12/07/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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