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North American Bond Research – January 13, 2021

Posted on January 13, 2021
HIGH YIELD BOND RESEARCH
January 13, 2021
Bond Markets

GLOBAL MARKETS WERE MIXED TO HIGHER AS DEMOCRATS AND SOME REPUBLICANS SETUP A VOTE TO IMPEACH PRESIDENT TRUMP. COVID-19 DEATHS ARE TOPPING 10K WORLDWIDE AND 4K+ IN THE US.10 Year Treasury notes were DOWN 5 bps. S&P +0.36%, Dow  +0.08%, NASDAQ +0.62%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 92.5 MILLION+ CASES AND 1.98 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 23.5 MILLION+ CASES AND 391000+ 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
+   Fiat Chrysler Automobiles NV 5.25% 4/15/2023 +0.1%
  T-Mobile USA Inc. 2.625% 2/15/2029 +0.4%
  Vale Overseas LTD 6.25% 8/10/2026 +0.3%
  Cenovus Energy Inc. 4.25% 4/15/2027 +0.1%
  T-Mobile USA Inc. 2.25% 2/15/2026 +0.6%
–   CBL & Associates LP 5.95% 12/15/2026 -8.6%
  Cenovus Energy Inc. 6.75% 11/15/2039 (1) -0.8%
  Vale Overseas LTD 3.75% 7/8/2030 -0.0%
  Cenovus Energy Inc. 5.375% 7/15/2025 -0.1%
  Kraft Heinz Co. 4.375% 6/1/2046 (2) -0.0%
CBL & Associates LP   5.95% 12/15/2026
Fiat Chrysler Automobiles NV   5.25% 4/15/2023
Cenovus Energy Inc.   6.75% 11/15/2039 (1)
Vale Overseas LTD   3.75% 7/8/2030
T-Mobile USA Inc.   2.625% 2/15/2029
Cenovus Energy Inc.   5.375% 7/15/2025
Kraft Heinz Co.   4.375% 6/1/2046 (2)
Vale Overseas LTD   6.25% 8/10/2026
Cenovus Energy Inc.   4.25% 4/15/2027
Cenovus Energy Inc.   5.4% 6/15/2047
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.10% 0.07% 0.43% 2.98% 0.17% 8.23%
Mining 0.12% 0.53% 8.32% 28.80% 0.54% 0.33%
Construction -0.12% 0.09% 0.44% 3.53% 0.13% 9.70%
Manufacturing -0.15% -0.03% 0.85% 5.61% 0.03% 7.30%
Transportion, Communication, Electric/Gas -0.15% -0.08% 0.75% 6.40% -0.02% 7.09%
Wholesale -0.11% 0.11% 119.20% 121.56% 0.13% 9.28%
Retail -0.15% -0.06% 1.22% 6.09% 0.01% 7.57%
Finance, Insurance, Real-Estate -0.17% -0.02% 0.77% 5.47% 0.05% 6.82%
Services -0.13% -0.03% 0.75% 5.63% 0.01% 7.24%
Public Administration 0.20% 0.31% 1.37% 3.78% 0.38% 11.41%
Energy 0.18% 0.64% 4.67% 25.33% 0.62% 0.94%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Vector Group LTD (USD) 5.75% 2/1/2029 144A (01/12/2021): 875MM Secured Notes, Price at Issuance 100, Yielding 5.75%.

2. DAE Funding LLC (USD) 3.375% 3/20/2028 144A (01/12/2021): 750MM Senior Unsecured Notes, Price at Issuance 98.711, Yielding 3.58%.

3. DAE Funding LLC (USD) 2.625% 3/20/2025 144A (01/12/2021): 500MM Senior Unsecured Notes, Price at Issuance 99.314, Yielding 2.8%.

1. Endurance International Group Holdings Inc.: $2.03B credit facilities: $200MM revolver; $1.83B TL

2. Nielseniq: $1.95B credit facilities: $350MM revolver; $950MM TL; $650MM TL

3. Protective Industrial Products Inc.: $670MM credit facilities: $75MM revolver; $435MM TL; $160MM TL

4. Sotera Health Co.: $1.768B TLB

5. Truck Hero Inc.: $1.75B credit facilities: $200MM ABL revolver; $1.55B TL

6. Alaska Communications Systems Group Inc.: $230MM senior secured credit facilities

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

8. Careismatic Brands: $715MM TLs: $575MM TL; $140MM TL

9. Cole-Parmer Instrument Co. LLC: $190MM TLs: $125MM TL; $65MM TL2

10. Adtalem: $1.4B credit facilities: $400MM revolver; $1B TLB

Additional Commentary

NEW ISSUANCE WATCH:   Vector Group LTD   issued $850 MM in Notes.
Top Widening Loans Top Narrowing Loans
ZEP Inc. (USD) TL L+825 08/11/2025
Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027
Monitronics Intl. Inc. (USD) TL EXIT L+500 07/03/2024
Alera Group Holdings Inc. (USD) TLB L+450 08/01/2025
Claire’s Stores (USD) TL L+650 12/18/2026
CSM Bakery (USD) TL L+1000 02/04/2022
Arbor Pharmaceuticals LLC (USD) TLB L+500 07/05/2023
Alliance Healthcare Services Inc. (USD) TL L+450 10/24/2023
CPV Shore LLC (USD) TLB L+375 12/27/2025
Aptean Inc. (USD) TL L+850 04/24/2027

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 16 bps (basis points), as of 01/13/2021
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
January 13, 2021
Bond Markets

GLOBAL MARKETS WERE MIXED TO HIGHER AS DEMOCRATS AND SOME REPUBLICANS SETUP A VOTE TO IMPEACH PRESIDENT TRUMP. COVID-19 DEATHS ARE TOPPING 10K WORLDWIDE AND 4K+ IN THE US.10 Year Treasury notes were DOWN 5 bps. S&P +0.36%, Dow  +0.08%, NASDAQ +0.62%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 92.5 MILLION+ CASES AND 1.98 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 23.5 MILLION+ CASES AND 391000+ 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
+   Abbvie Inc. 4.25% 11/21/2049 +2.1%
  Anheuser-Busch Inbev Worldwide Inc. 4.9% 2/1/2046 +1.7%
  Walt Disney Co. 2.65% 1/13/2031 +0.5%
  Bristol-Myers Squibb Co. 2.55% 11/13/2050 +1.7%
  Verizon Communications Inc. 2.875% 11/20/2050 +1.6%
–   Charles Schwab Corp. VAR% PERP (1) -1.7%
  Regeneron Pharmaceuticals Inc. 1.75% 9/15/2030 -0.2%
  Vale Overseas LTD 3.75% 7/8/2030 -0.0%
  CSX Corp. 2.4% 2/15/2030 -5.4%
  Bank of America Corp. 3.3% 1/11/2023 -0.1%
Abbvie Inc.   4.25% 11/21/2049
Anheuser-Busch Inbev Worldwide Inc.   4.9% 2/1/2046
Walt Disney Co.   2.65% 1/13/2031
Bristol-Myers Squibb Co.   2.55% 11/13/2050
Verizon Communications Inc.   2.875% 11/20/2050
Coca-Cola Co.   2.5% 3/15/2051
Charles Schwab Corp.   VAR% PERP (1)
Verizon Communications Inc.   3% 11/20/2060
AT&T Inc.   2.25% 2/1/2032
Abbott Laboratories   4.9% 11/30/2046
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.62% -0.47% 0.55% 4.17% -0.53% 8.10%
Construction -0.59% -0.58% -0.07% 3.81% -0.57% 8.13%
Manufacturing -0.50% -0.48% -0.05% 1.80% -0.48% 8.47%
Transportion, Communication, Electric/Gas -0.72% -0.74% -0.22% 2.39% -0.82% 9.63%
Wholesale -0.35% -0.30% 0.31% 3.23% -0.36% 10.10%
Retail -0.65% -0.77% -0.14% 2.14% -0.77% 9.81%
Finance, Insurance, Real-Estate -0.35% -0.25% 0.16% 1.70% -0.24% 7.59%
Services -0.50% -0.49% 0.06% 1.77% -0.49% 8.10%
Public Administration -0.05% -0.03% 0.12% 0.19% -0.01% 5.06%
Energy -0.61% -0.42% 0.75% 4.94% -0.51% 7.57%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Credit Agricole CIB SA (USD) 0.4% 1/15/2023 (01/12/2021): 150MM Senior Unsecured Notes, Price at Issuance 100, Yielding .4%.

2. KFW (USD) 0.625% 1/22/2026 (01/12/2021): 5000MM Senior Unsecured Notes, Price at Issuance 99.985, Yielding .63%.

3. Kuntarahoitus Oyj (USD) 0.625% 3/20/2026 (01/12/2021): 1500MM Senior Unsecured Notes.

4. Caisse d’Ammortissement de la Dette Sociale (USD) 1.375% 1/20/2031 144A (01/12/2021): 5000MM Unsecured Notes.

5. Aviation Capital Group LLC (USD) 1.95% 1/13/2026 144A (01/12/2021): 750MM Senior Unsecured Notes, Price at Issuance 99.044, Yielding 2.15%.

6. Main Street Capital Corp. (USD) 3% 7/14/2026 (01/12/2021): 300MM Senior Unsecured Notes, Price at Issuance 99.004, Yielding 3.2%.

7. BPCE SA (USD) 1% 1/20/2026 (01/12/2021): 1750MM Senior Preferred Security, Price at Issuance 99.539, Yielding 1.09%.

8. BPCE SA (USD) VAR% 1/20/2032 144A (01/12/2021): 1250MM Senior Non Preferred Notes, Price at Issuance 100.

9. Pacific Life Global Fdg MTN (USD) 1.45% 1/20/2028 144A (01/12/2021): 600MM Secured Notes, Price at Issuance 99.96, Yielding 1.46%.

10. Trinity Health (USD) 2.632% 12/1/2040 (01/12/2021): 300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.63%.

Additional Commentary

NEW ISSUANCE WATCH:    Credit Agricole CIB SA issued  $150 MM in Notes.
Top Widening Loans Top Narrowing Loans
ZEP Inc. (USD) TL L+825 08/11/2025
Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027
Monitronics Intl. Inc. (USD) TL EXIT L+500 07/03/2024
Alera Group Holdings Inc. (USD) TLB L+450 08/01/2025
Claire’s Stores (USD) TL L+650 12/18/2026
CSM Bakery (USD) TL L+1000 02/04/2022
Arbor Pharmaceuticals LLC (USD) TLB L+500 07/05/2023
Alliance Healthcare Services Inc. (USD) TL L+450 10/24/2023
CPV Shore LLC (USD) TLB L+375 12/27/2025
Aptean Inc. (USD) TL L+850 04/24/2027

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 16 bps (basis points), as of 01/13/2021
  • Net positive capital flows into high-yield ETFs & mutual funds

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