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North American Bond Research – February 3, 2020

Posted on February 3, 2020
HIGH YIELD BOND RESEARCH
February 3, 2020
Bond Markets

MARKETS REBOUNDED FROM LARGE LOSES LAST WEEK DUE TO THE CORONA VIRUS. BREXIT HAPPENED AT THE END OF FRIDAY AND THE POUND’S VALUE DROPPED 1.4% IN VALUE AGAINST THE USD. 10 year Treasury notes were down 4.7 basis points. S&P 10 year Treasury notes were down 3.8 basis points. S&P +0.72%, Dow +0.55%, NASDAQ +1.34%.
HINA TO DATE HAS HAD 17400+ CASES AND 370+ DEATHS. INFECTION HAS SPREAD TO OVER 27 COUNTRIES WITH 170+ CONFIRMED CASES.  Among high-grade bonds showing topmost price gains at appreciable volumes traded, JC Penney Co Inc (USD) 7.125% 11/15/2023 made analysts’ ‘Conviction Buy’ list. (See the chart below for JC Penney Co Inc. bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Intelsat Connect Finance 9.5% 2/15/2023 144A + 8.5%
  EQT Corp. 6.125% 2/1/2025 + 0.2%
  Teva Pharmaceuticals Fin BV 6% 4/15/2024 + 0.1%
–   Sprint Corp. 7.25% 2/1/2028 144A -0.0%
  Delphi Automotive PLC 5% 10/1/2025 144A -0.1%
  L Brands Inc. 6.875% 11/1/2035 -1.5%
Intelsat Connect Finance   9.5% 2/15/2023 144A
Intelsat Jackson Hldg SA   8.5% 10/15/2024 144A
EQT Corp.   6.125% 2/1/2025
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.19% -0.19% 1.02% 3.05% 1.03% 17.99%
Mining -0.33% -1.35% -2.11% 2.42% -2.07% 2.57%
Construction 0.04% 0.10% 0.92% 2.17% 0.95% 13.23%
Manufacturing -0.04% -0.22% 0.79% 3.40% 0.84% 12.14%
Transportion, Communication, Electric/Gas -0.08% -0.37% 0.54% 2.60% 0.62% 13.00%
Wholesale -0.06% -0.24% 1.47% 2.53% 1.44% 10.04%
Retail -0.05% -0.18% 0.57% 2.73% 0.60% 13.85%
Finance, Insurance, Real-Estate 0.00% -0.11% 0.89% 2.50% 0.92% 12.53%
Services -0.04% -0.32% 0.55% 2.53% 0.57% 11.14%
Public Administration -0.08% 0.22% 0.93% 2.77% 1.03% 13.73%
Energy -0.26% -1.10% -1.33% 3.01% -1.32% 4.24%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. LCPR Senior Secured Financing Designated Activity Company (USD) 6.75% 10/15/2027 144A (02/03/2020): 1200MM First Lien Notes, Price at Issuance 100, Yielding 6.75%.

2. AG Issuer, LLC (USD) 6.25% 3/1/2028 144A (02/03/2020): 500MM First Lien Notes, Price at Issuance 100, Yielding 6.25%.

3. Castle US Holding Corp. (USD) 9.5% 2/15/2028 144A (02/03/2020): 300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 9.5%.

1. Qmax Financial Holdings Inc.: $225MM, Expected 4th Quarter 2019

2. Calpine Corp.: $1.4B bonds, Expected Q4 2019

3. Diamondback Energy Inc.: High-yield notes, Expected Q4 2019

Additional Commentary

NEW ISSUANCE WATCH: on 01/30/2020 participants welcome a $1000MM new corporate-bond offering by
Sprint Corp.  The most recent data showed money flowed in of ETF/mutual funds for the week ended 01/10/2020, with a net inflow of $9.8 billion.
Top Widening Credit Default Swaps (CDS) Top Narrowing Credit Default Swaps (CDS)
Rite Aid Corp. (5Y Sen USD MR14)
Weatherford International LTD (5Y Sen USD MR14)
Hertz Corp. (5Y Sen USD CR14)
Ghana, Republic of (5Y Sen USD CR14)
Road King Infrastructure LTD (5Y Sen USD CR14)
Export Credit Bank of Turkey (5Y Sen USD CR14)

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 21 bp (basis points), as of 02/03/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

HIGH YIELD BOND RESEARCH
February 3, 2020
Bond Markets

MARKETS REBOUNDED FROM LARGE LOSES LAST WEEK DUE TO THE CORONA VIRUS. BREXIT HAPPENED AT THE END OF FRIDAY AND THE POUND’S VALUE DROPPED 1.4% IN VALUE AGAINST THE USD. 10 year Treasury notes were down 4.7 basis points. S&P 10 year Treasury notes were down 3.8 basis points. S&P +0.72%, Dow +0.55%, NASDAQ +1.34%.
HINA TO DATE HAS HAD 17400+ CASES AND 370+ DEATHS. INFECTION HAS SPREAD TO OVER 27 COUNTRIES WITH 170+ CONFIRMED CASES.  Among high-grade bonds showing topmost price gains at appreciable volumes traded, JC Penney Co Inc (USD) 7.125% 11/15/2023 made analysts’ ‘Conviction Buy’ list. (See the chart below for JC Penney Co Inc. bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Intelsat Connect Finance 9.5% 2/15/2023 144A + 8.5%
  EQT Corp. 6.125% 2/1/2025 + 0.2%
  Teva Pharmaceuticals Fin BV 6% 4/15/2024 + 0.1%
–   Sprint Corp. 7.25% 2/1/2028 144A -0.0%
  Delphi Automotive PLC 5% 10/1/2025 144A -0.1%
  L Brands Inc. 6.875% 11/1/2035 -1.5%
Intelsat Connect Finance   9.5% 2/15/2023 144A
EQT Corp.   6.125% 2/1/2025
Teva Pharmaceuticals Fin BV   6% 4/15/2024
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.19% -0.19% 1.02% 3.05% 1.03% 17.99%
Mining -0.33% -1.35% -2.11% 2.42% -2.07% 2.57%
Construction 0.04% 0.10% 0.92% 2.17% 0.95% 13.23%
Manufacturing -0.04% -0.22% 0.79% 3.40% 0.84% 12.14%
Transportion, Communication, Electric/Gas -0.08% -0.37% 0.54% 2.60% 0.62% 13.00%
Wholesale -0.06% -0.24% 1.47% 2.53% 1.44% 10.04%
Retail -0.05% -0.18% 0.57% 2.73% 0.60% 13.85%
Finance, Insurance, Real-Estate 0.00% -0.11% 0.89% 2.50% 0.92% 12.53%
Services -0.04% -0.32% 0.55% 2.53% 0.57% 11.14%
Public Administration -0.08% 0.22% 0.93% 2.77% 1.03% 13.73%
Energy -0.26% -1.10% -1.33% 3.01% -1.32% 4.24%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 02/03/2020)
1. Qmax Financial Holdings Inc.: $225MM, Expected 4th Quarter 2019

2. Calpine Corp.: $1.4B bonds, Expected Q4 2019

3. Diamondback Energy Inc.: High-yield notes, Expected Q4 2019

Additional Commentary

NEW ISSUANCE WATCH: on 01/30/2020 participants welcome a $1000MM new corporate-bond offering by
Sprint Corp.  The most recent data showed money flowed in of ETF/mutual funds for the week ended 01/10/2020, with a net inflow of $9.8 billion.
Top Widening Credit Default Swaps (CDS) Top Narrowing Credit Default Swaps (CDS)
Rite Aid Corp. (5Y Sen USD MR14)
Weatherford International LTD (5Y Sen USD MR14)
Hertz Corp. (5Y Sen USD CR14)
Ghana, Republic of (5Y Sen USD CR14)
Road King Infrastructure LTD (5Y Sen USD CR14)
Export Credit Bank of Turkey (5Y Sen USD CR14)

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 21 bp (basis points), as of 02/03/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

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