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North American Bond Research – July 14, 2020

Posted on July 14, 2020
HIGH YIELD BOND RESEARCH
July 14, 2020
Bond Markets
MARKETS ENDED HIGHER SUPPORTED BY THE FACT THAT JP MORGAN AND OTHER MAJOR BANKS ARE BULKING UP TO CONFIDENTLY DEAL WITH THE PANDEMIC ECONOMIC RAMIFICATIONS. 10 Year Treasury notes were up 2.8 bps. S&P +1.34%, Dow +2.13%, NASDAQ +0.94%.

CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 13.4 MILLION+ CASES AND 579000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 3.5 MILLION+ CASES AND 139000+ 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. 3.75% 4/15/2027 144A +0.2%
  Pacific Gas & Electric Co. 3.85% 11/15/2023 +0.8%
  Vale Overseas LTD 3.75% 7/8/2030 +0.1%
  Pacific Gas & Electric Co. 4% 12/1/2046 +0.7%
  Lennar Corp. 2.95% 11/29/2020 +0.7%
–   T-Mobile USA Inc. 3.875% 4/15/2030 144A -0.1%
  Western Midstream Operating, LP 4.05% 2/1/2030 -0.7%
  Washington Prime Group LP 5.95% 8/15/2024 -0.5%
  Delta Airlines 7.375% 1/15/2026 -1.9%
  Pacific Gas & Electric Co. 3.25% 6/15/2023 -0.1%
T-Mobile USA Inc.   3.875% 4/15/2030 144A
T-Mobile USA Inc.   3.75% 4/15/2027 144A
Western Midstream Operating, LP   4.05% 2/1/2030
Pacific Gas & Electric Co.   3.85% 11/15/2023
Washington Prime Group LP   5.95% 8/15/2024
Delta Airlines   7.375% 1/15/2026
Vale Overseas LTD   3.75% 7/8/2030
Pacific Gas & Electric Co.   4% 12/1/2046
Pacific Gas & Electric Co.   3.25% 6/15/2023
Carpenter Technology   6.375% 7/15/2028
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.33% 0.77% 0.80% 6.64% 1.98% 6.09%
Mining 0.10% -0.59% -1.10% 21.62% -17.07% -11.41%
Construction 0.11% 0.32% 1.11% 10.04% 0.28% 5.63%
Manufacturing 0.06% 0.29% 0.83% 7.55% -1.18% 4.41%
Transportion, Communication, Electric/Gas 0.12% 0.16% 0.52% 7.58% 1.25% 5.77%
Wholesale 0.09% 0.38% 0.72% 11.32% -0.43% 4.07%
Retail 0.01% 0.20% 0.28% 6.61% -2.89% 2.19%
Finance, Insurance, Real-Estate 0.04% 0.07% 0.79% 8.46% -1.78% 3.61%
Services 0.04% 0.32% -0.41% 6.67% -2.07% 4.38%
Public Administration 0.02% 0.02% 1.35% 15.23% 1.41% 6.48%
Energy 0.15% -0.11% -0.82% 23.73% -13.96% -9.59%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. JIU An Finance Co. LTD. (USD) 9.5% 7/17/2023 (07/13/2020): 300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 9.5%.

2. Boise Cascade Corp. (USD) 4.875% 7/1/2030 144A (07/13/2020): 400MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.88%.

3. Freeport-McMoRan Inc. (USD) 4.625% 8/1/2030 (07/13/2020): 850MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.63%.

4. Freeport-McMoRan Inc. (USD) 4.375% 8/1/2028 (07/13/2020): 650MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.38%.

5. Boise Cascade Corp. (USD) 4.875% 7/1/2030 Reg S (07/13/2020): 400MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.88%.

6. Ultrapar International SA (USD) 5.25% 6/6/2029 (07/13/2020): 350MM Senior Unsecured Notes, Price at Issuance 99.994.

 1. Thyssenkrupp Elevator: $2.875B seven-year first-lien term loan B (B1/B/B+); ¬1.1015B seven-year first-lien first-lien term loan B (B1/B/B+)

2. Logmein Inc.: $3.55B credit facilities: $250MM Revolver; $2.7B first lien TL; $600MM second-lien TL

3. Alion Science & Technology Corp.: $400MM credit facilities: $40MM Revolver (Ba1/BB); $360MM TL (B1/BB-)

4. Authentic Brands Group LLC: $150MM TL (B2/B)

5. First Brands Group LLC: $710MM TL

6. Huntsworth PLC: $300MM TL

7. Agrofesh Solutions Inc.: $50MM covenant-lite TL

8. RSA: $1.425B credit facilities: $75MM revolver; $1B TL; $350MM TL

9. Huntsworth PLC: $300MM TL

10. Logmein Inc.: $3.55B credit facilities: $250MM Revolver; $2.7B first lien TL; $600MM second-lien TL
Additional Commentary
NEW ISSUANCE WATCH: Boise Cascade issued $400MM in notes.
Top Widening Loans Top Narrowing Loans
PortAventura World (EUR) TLB E+350 06/14/2024
AMC Networks Inc. (USD) TLA L+150 07/08/2023
Albertsons LLC (USD) TL L+275 11/17/2025
Revere Power LLC (USD) TLB L+425 03/29/2026
Cast & Crew Payroll LLC (USD) TLB L+375 02/07/2026		 Syncreon Group BV (USD) TL 10/01/2024
Conduent Business Services LLC (USD) TLA L+175 12/07/2022
Distributed Power Inc. (USD) TLB L+325 11/02/2025
Del Monte Foods Co. (USD) TLB L+325 02/18/2021
Coty Inc. (EUR) TLA E+175 04/05/2023

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 bp (basis points), as of 07/14/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
July 14, 2020
Bond Markets
MARKETS ENDED HIGHER SUPPORTED BY THE FACT THAT JP MORGAN AND OTHER MAJOR BANKS ARE BULKING UP TO CONFIDENTLY DEAL WITH THE PANDEMIC ECONOMIC RAMIFICATIONS. 10 Year Treasury notes were up 2.8 bps. S&P +1.34%, Dow +2.13%, NASDAQ +0.94%.

CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 13.4 MILLION+ CASES AND 579000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 3.5 MILLION+ CASES AND 139000+ 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
+   Pacific Gas & Electric Co. 2.5% 2/1/2031 +0.6%
  Pacific Gas & Electric Co. 3.5% 8/1/2050 +0.9%
  BorgWarner Inc. 2.65% 7/1/2027 +0.3%
  JP Morgan Chase & Co. 4.6% PERP +0.4%
  TJX Cos. Inc. 4.5% 4/15/2050 +0.5%
–   Dupont de Nemours Inc. 2.169% 5/1/2023 -0.1%
  Southwest Airlines Co. 5.125% 6/15/2027 -0.9%
  Citigroup Inc. 4.412% 3/31/2031 -0.2%
  Pacific Gas & Electric Co. 2.1% 8/1/2027 -0.1%
  AerCap Ireland Capital LTD 6.5% 7/15/2025 -0.1%
Pacific Gas & Electric Co.   2.5% 2/1/2031
Pacific Gas & Electric Co.   3.5% 8/1/2050
BorgWarner Inc.   2.65% 7/1/2027
JP Morgan Chase & Co.   4.6% PERP
TJX Cos. Inc.   4.5% 4/15/2050
Dupont de Nemours Inc.   2.169% 5/1/2023
Discovery Communications Hldg LLC   4.125% 5/15/2029
Anheuser-Busch Inbev Worldwide Inc.   4.15% 1/23/2025
Dollar General Corp.   4.125% 4/3/2050
Simon Property Group Inc.   2.65% 7/15/2030
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.16% 0.69% 1.68% 12.18% 3.00% 7.84%
Construction -0.07% 0.76% 1.85% 8.14% 3.64% 7.70%
Manufacturing 0.10% 0.66% 1.97% 5.43% 6.51% 11.23%
Transportion, Communication, Electric/Gas 0.15% 1.09% 2.46% 7.81% 7.78% 13.46%
Wholesale 0.12% 0.39% 1.27% 7.04% 4.54% 10.54%
Retail 0.12% 0.85% 2.10% 5.86% 7.44% 12.81%
Finance, Insurance, Real-Estate 0.05% 0.40% 1.41% 5.23% 5.06% 8.81%
Services 0.14% 0.71% 2.10% 5.55% 5.94% 10.30%
Public Administration 0.06% -0.17% 0.03% 1.06% 4.35% 5.37%
Energy 0.08% 0.50% 1.35% 12.63% 2.83% 7.64%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. New York Life Global Funding (USD) 0.4% 9/20/2022 144A (07/13/2020): 200MM Secured Notes, Price at Issuance 99.981, Yielding .41%.

2. New York Life Global Funding (USD) 0.4% 9/20/2022 Reg S (07/13/2020): 200MM Secured Notes, Price at Issuance 99.981, Yielding .41%.

3. Mars Inc. (USD) 2.45% 7/16/2050 144A (07/13/2020): 400MM Senior Unsecured Notes, Price at Issuance 99.431, Yielding 2.48%.

4. Mars Inc. (USD) 0.875% 7/16/2026 144A (07/13/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.86, Yielding .9%.

5. Mars Inc. (USD) 1.625% 7/16/2032 144A (07/13/2020): 700MM Senior Unsecured Notes, Price at Issuance 99.837, Yielding 1.64%.

6. Mars Inc. (USD) 2.375% 7/16/2040 144A (07/13/2020): 900MM Senior Unsecured Notes, Price at Issuance 99.968, Yielding 2.38%.

7. Mars Inc. (USD) 2.45% 7/16/2050 Reg S (07/13/2020): 400MM Senior Unsecured Notes, Price at Issuance 99.431, Yielding 2.48%.

8. Mars Inc. (USD) 0.875% 7/16/2026 Reg S (07/13/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.86, Yielding .9%.

9. Mars Inc. (USD) 1.625% 7/16/2032 Reg S (07/13/2020): 700MM Senior Unsecured Notes, Price at Issuance 99.837, Yielding 1.64%.

10. Mars Inc. (USD) 2.375% 7/16/2040 Reg S (07/13/2020): 900MM Senior Unsecured Notes, Price at Issuance 99.968, Yielding 2.38%.
Additional Commentary
NEW ISSUANCE WATCH: on 07/14/2020 participants welcome a $5000MM new corporate-bond offering by Mars Inc.
Top Widening Loans Top Narrowing Loans
PortAventura World (EUR) TLB E+350 06/14/2024
AMC Networks Inc. (USD) TLA L+150 07/08/2023
Albertsons LLC (USD) TL L+275 11/17/2025
Revere Power LLC (USD) TLB L+425 03/29/2026
Cast & Crew Payroll LLC (USD) TLB L+375 02/07/2026		 Syncreon Group BV (USD) TL 10/01/2024
Conduent Business Services LLC (USD) TLA L+175 12/07/2022
Distributed Power Inc. (USD) TLB L+325 11/02/2025
Del Monte Foods Co. (USD) TLB L+325 02/18/2021
Coty Inc. (EUR) TLA E+175 04/05/2023

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 bp (basis points), as of 07/14/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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