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North American Bond Research – January 4, 2021

Posted on January 5, 2021
HIGH YIELD BOND RESEARCH
January 4, 2021
Bond Markets

GLOBAL MARKETS WERE LOWER AS COVID CONTINUES TO SURGE AND THE ROLLOUT OF VACCINES ARE BEHIND SCHEDULE. THE POST ELECTION CIRCUS CREATED BY PRESIDENT TRUMP ASKING THE SECRETARY OF STATE OF GEORGIA TO “FIND” VOTES IS PUTTING DOWNWARD PRESSURE ON THE MARKET. 10 Year Treasury notes were DOWN 0.9 bps. S&P -1.48%, Dow  -1.25%, NASDAQ -1.47%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 86 MILLION+ CASES AND 1.86 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 21.3 MILLION+ CASES AND 362000+ 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
+   Genesis Energy LP 8% 1/15/2027 +0.2%
  General Motors Co. 4.875% 10/2/2023 +0.1%
  Frontier Communications Corp. 11% 9/15/2025 +4.1%
  Lennar Corp. 4.75% 11/29/2027 +0.2%
  Sesi LLC 7.75% 9/15/2024 +4.7%
–   Broadcom LTD 4.3% 11/15/2032 -1.3%
  Broadcom LTD 4.7% 4/15/2025 -0.4%
  Broadcom LTD 4.11% 9/15/2028 -0.7%
  Cheniere Corpus Christi Hldgs LLC 5.875% 3/31/2025 -0.1%
  QEP Resources Inc. 5.625% 3/1/2026 -0.7%
Broadcom LTD   4.3% 11/15/2032
Broadcom LTD   4.7% 4/15/2025
Genesis Energy LP   8% 1/15/2027
General Motors Co.   4.875% 10/2/2023
Frontier Communications Corp.   11% 9/15/2025
Lennar Corp.   4.75% 11/29/2027
Broadcom LTD   4.11% 9/15/2028
Cheniere Corpus Christi Hldgs LLC   5.875% 3/31/2025
QEP Resources Inc.   5.625% 3/1/2026
Sesi LLC   7.75% 9/15/2024
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.00% 0.17% 0.39% 3.18% 8.56% 8.56%
Mining -0.07% 0.51% 8.66% 27.57% 0.84% 0.84%
Construction -0.04% 0.25% 0.51% 3.74% 8.95% 8.95%
Manufacturing -0.08% 0.34% 1.26% 5.87% 7.70% 7.70%
Transportion, Communication, Electric/Gas -0.04% 0.35% 1.08% 6.81% 7.40% 7.40%
Wholesale -0.03% 0.24% 118.69% 120.18% 9.12% 9.12%
Retail -0.09% 0.49% 1.96% 6.75% 7.94% 7.94%
Finance, Insurance, Real-Estate -0.07% 0.36% 1.12% 5.88% 6.89% 6.89%
Services -0.06% 0.42% 1.49% 5.52% 7.52% 7.52%
Public Administration 0.02% 0.22% 1.10% 4.02% 10.89% 10.89%
Energy -0.03% 0.56% 4.99% 23.75% 2.33% 2.33%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 01/04/2021)
1. American Public Education Inc.: $195MM credit facilities: $20MM revolver; $175MM TLB

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

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

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

5. Gemini HDPE LLC: $600MM TLB (Ba3/BB)

6. Syncapay: $500MM credut facilities (B2/B): $50MM revolver; $450MM TLB

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

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

9. Cloudera Inc.: $500MM TLB (Ba3/BB-)

10. Gemini HDPE LLC: $600MM TLB (Ba3/BB)

Additional Commentary

NEW ISSUANCE WATCH:  No New Issues. 
Top Widening Loans Top Narrowing Loans
Penn Virginia Corp. (USD) TL2 L+700 09/29/2022
Learning Care Group Inc. (USD) TL L+750 03/13/2026
Sundyne US Purchaser (USD) TLB L+425 03/17/2027
EG Group (EUR) TL E+775 03/23/2026
Petroleum Geo-Services ASA (USD) TL L+700 3/19/2024
Deoleo SA (EUR) TLB 06/24/2025
Averys SA (EUR) TLB E+825 09/25/2026
Garrett Motion (USD) TLB L+250 09/27/2025
Natel Engineering Co. Inc. (USD) TLB L+500 04/30/2026
Sunrise Medical Inc. (EUR) TLB E+350 04/10/2025

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 01/04/2021
  • Net negative capital flows into high-yield ETFs & mutual funds
INVESTMENT GRADE BOND RESEARCH
January 4, 2021
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 86 MILLION+ CASES AND 1.86 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 21.3 MILLION+ CASES AND 362000+ 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 +0.2%
  Dominion Resources Inc. 5.95% 6/15/2035 +1.0%
  National Australia Bank/NY 2.8% 1/10/2022 +0.1%
  Charles Schwab Corp. VAR% PERP (1) +2.0%
  Owl Rock Capital Corp. 3.4% 7/15/2026 +0.0%
–   Broadcom LTD 4.15% 11/15/2030 -1.1%
  CVS Health Corp. 5.05% 3/25/2048 -1.5%
  Verizon Communications Inc. 2.875% 11/20/2050 -1.1%
  Boeing Co. 5.805% 5/1/2050 -0.4%
  Bank of America Corp. VAR% 10/24/2026 -0.4%
Broadcom LTD   4.15% 11/15/2030
CVS Health Corp.   5.05% 3/25/2048
Verizon Communications Inc.   2.875% 11/20/2050
CVS Health Corp.   4.3% 3/25/2028
Boeing Co.   5.805% 5/1/2050
Bank of America Corp.   VAR% 10/24/2026
Boeing Co.   3.25% 2/1/2028
Northrop Grumman Corp.   2.55% 10/15/2022
Toyota Motor Credit Corp.   FLT% 12/13/2021
Citigroup Inc.   3.106% 4/8/2026
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.02% 0.43% 1.27% 4.63% 9.72% 9.72%
Construction -0.08% 0.25% 0.50% 4.20% 9.35% 9.35%
Manufacturing -0.08% 0.22% 0.22% 2.24% 9.85% 9.85%
Transportion, Communication, Electric/Gas -0.03% 0.29% 0.35% 2.91% 11.42% 11.42%
Wholesale -0.07% 0.16% 0.77% 3.13% 10.65% 10.65%
Retail -0.08% 0.28% 0.16% 2.87% 11.39% 11.39%
Finance, Insurance, Real-Estate -0.07% 0.17% 0.30% 1.95% 8.44% 8.44%
Services -0.11% 0.19% 0.34% 2.14% 9.22% 9.22%
Public Administration 0.02% 0.07% 0.16% 0.19% 5.49% 5.49%
Energy -0.02% 0.46% 1.50% 5.20% 8.93% 8.93%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]

(None Current 01/04/2021)
Additional Commentary

NEW ISSUANCE WATCH:  No New Issues.
Top Widening Loans Top Narrowing Loans
Penn Virginia Corp. (USD) TL2 L+700 09/29/2022
Learning Care Group Inc. (USD) TL L+750 03/13/2026
Sundyne US Purchaser (USD) TLB L+425 03/17/2027
EG Group (EUR) TL E+775 03/23/2026
Petroleum Geo-Services ASA (USD) TL L+700 3/19/2024
Deoleo SA (EUR) TLB 06/24/2025
Averys SA (EUR) TLB E+825 09/25/2026
Garrett Motion (USD) TLB L+250 09/27/2025
Natel Engineering Co. Inc. (USD) TLB L+500 04/30/2026
Sunrise Medical Inc. (EUR) TLB E+350 04/10/2025

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 01/04/2021
  • Net positive capital flows into high-yield ETFs & mutual funds

 

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