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North American Bond Research – July 15, 2020

Posted on July 15, 2020
HIGH YIELD BOND RESEARCH
July 15, 2020
Bond Markets

A COMBINATION OF FACTORS PUSHED MARKETS UP. TRUMP IS LEANING ON NOT SANCTIONING CHINA. FIGURES FOR CAR, HOMES, DURABLE GOOD AND REFINANCING HELPED KEEP THE ECONOMY GOING. 10 Year Treasury notes were up 1.8 bps. S&P +0.91%, Dow +0.85%, NASDAQ +0.59%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 13.7 MILLION+ CASES AND 586000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 3.6 MILLION+ CASES AND 140000+ 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
+   Pacific Gas & Electric Co. 3.95% 12/1/2047 +2.9%
  Delta Airlines 7.375% 1/15/2026 +2.0%
  Delta Airlines 2.9% 10/28/2024 +2.2%
  Smithsonian Institution 2.645% 9/1/2039 +2.6%
  Pacific Gas & Electric Co. 4% 12/1/2046 +2.1%
–   Sabine Pass Liquefaction LLC 5.625% 3/1/2025 -0.1%
  Ford Motor Co. 9% 4/22/2025 -1.7%
  CF Industries Hldg Inc. 3.45% 6/1/2023 -0.5%
  Dollar General Corp. 3.25% 4/15/2023 -0.2%
  Citigroup Inc. 6.125% PERP -0.2%
Pacific Gas & Electric Co.   3.95% 12/1/2047
Delta Airlines   7.375% 1/15/2026
Delta Airlines   2.9% 10/28/2024
Pacific Gas & Electric Co.   4% 12/1/2046
Smithsonian Institution   2.645% 9/1/2039
Petrobras Global Finance BV   8.75% 5/23/2026
Western Midstream Operating, LP   3.1% 2/1/2025
Freeport-McMoRan Inc.   4.375% 8/1/2028
Freeport-McMoRan Inc.   4.625% 8/1/2030
Pacific Gas & Electric Co.   3.3% 12/1/2027
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.05% 0.67% 0.85% 5.25% 2.02% 6.11%
Mining -0.02% -0.64% -1.05% 19.49% -17.47% -11.91%
Construction -0.04% 0.16% 1.11% 8.64% 0.11% 5.25%
Manufacturing 0.00% 0.17% 0.97% 6.25% -0.94% 4.38%
Transportion, Communication, Electric/Gas -0.03% 0.05% 0.51% 6.18% 1.26% 5.75%
Wholesale -0.07% -0.30% 0.02% 13.66% -1.69% 2.52%
Retail -0.01% 0.14% 0.48% 5.81% -2.81% 2.12%
Finance, Insurance, Real-Estate -0.05% 0.02% 0.83% 7.15% -1.60% 3.82%
Services 0.00% 0.23% -0.17% 5.59% -1.53% 4.93%
Public Administration 0.02% -0.28% 1.35% 10.84% 1.43% 6.48%
Energy -0.08% -0.41% -0.65% 21.37% -13.91% -9.59%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Pattern Energy Group LP (USD) 4.5% 8/15/2028 144A (07/14/2020): 700MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.5%.

2. Pattern Energy Group LP (USD) 4.5% 8/15/2028 Reg S (07/14/2020): 700MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.5%.

3. Carnival Corp. (USD) 10.5% 2/1/2026 144A (07/15/2020): 775MM Second Lien Notes, Price at Issuance 100, Yielding 10.5%.

4. Carnival Corp. (USD) 10.5% 2/1/2026 Reg S (07/15/2020): 775MM Second Lien Notes, Price at Issuance 100, Yielding 10.5%.

5. AdaptHealth LLC (USD) 6.125% 8/1/2028 144A (07/15/2020): 350MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.13%.

6. Joseph T Ryerson & Son Inc. (USD) 8.5% 8/1/2028 144A (07/15/2020): 500MM Secured Notes, Price at Issuance 100, Yielding 8.5%.

7. AdaptHealth LLC (USD) 6.125% 8/1/2028 Reg S (07/15/2020): 350MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.13%.

8. Joseph T Ryerson & Son Inc. (USD) 8.5% 8/1/2028 Reg S (07/15/2020): 100MM Secured Notes, Price at Issuance 100, Yielding 8.5%.

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: Carnival Corp issued $775MM in notes.
Top Widening Loans Top Narrowing Loans
Casper Bidco (EUR) TL E+850 07/30/2027
Unifrax Corp. (USD) TL2 L+850 12/14/2026
Distributed Power Inc. (EUR) TL E+800 11/02/2026
Automate Intermediate Hldg II Sarl (USD) TLB L+425 07/22/2026
Automate Intermediate Hldg II Sarl (EUR) TLB E+350 07/22/2026
Logoplaste (EUR) TLB E+400 10/31/2023
Tacala LLC (USD) TLB L+750 02/05/2028
ProFrac Services LLC (USD) TLB L+575 09/06/2023
Albertsons LLC (USD) TL L+275 11/17/2025
Orion EngineeRed Carbons Hldgs GmbH (USD) TLB L+200 07/25/2024

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 14 bp (basis points), as of 07/15/2020
INVESTMENT GRADE BOND RESEARCH
July 15, 2020
Bond Markets

A COMBINATION OF FACTORS PUSHED MARKETS UP. TRUMP IS LEANING ON NOT SANCTIONING CHINA. FIGURES FOR CAR, HOMES, DURABLE GOOD AND REFINANCING HELPED KEEP THE ECONOMY GOING. 10 Year Treasury notes were up 1.8 bps. S&P +0.91%, Dow +0.85%, NASDAQ +0.59%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 13.7 MILLION+ CASES AND 586000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 3.6 MILLION+ CASES AND 140000+ 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
+   Australia & New Zealand Banking Grp 2.625% 11/9/2022 +0.0%
  Anheuser-Busch Inbev Worldwide Inc. 4.9% 2/1/2046 +0.3%
  Altria Group Inc. 4.8% 2/14/2029 +0.2%
  Boeing Co. 4.875% 5/1/2025 +0.3%
  Banco Santander SA 3.49% 5/28/2030 +0.2%
–   Simon Property Group Inc. 2.65% 7/15/2030 -0.2%
  Marriott Intl Inc. 4.625% 6/15/2030 -0.0%
  American Intl Group Inc. 2.5% 6/30/2025 -0.2%
  Simon Property Group Inc. 3.8% 7/15/2050 -0.1%
  HCA Inc. 5.5% 6/15/2047 -0.5%
Australia & New Zealand Banking Grp   2.625% 11/9/2022
Anheuser-Busch Inbev Worldwide Inc.   4.9% 2/1/2046
Altria Group Inc.   4.8% 2/14/2029
Boeing Co.   4.875% 5/1/2025
Banco Santander SA   3.49% 5/28/2030
Verizon Communications Inc.   4.125% 3/16/2027
CVS Health Corp.   4.3% 3/25/2028
American Intl Group Inc.   3.4% 6/30/2030
Pacific Gas & Electric Co.   3.5% 8/1/2050
Oracle Corp.   3.85% 4/1/2060
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.08% 0.42% 1.74% 11.58% 3.15% 7.70%
Construction -0.02% 0.44% 1.77% 6.23% 3.78% 7.11%
Manufacturing 0.01% 0.45% 2.03% 4.96% 6.61% 11.36%
Transportion, Communication, Electric/Gas 0.03% 0.81% 2.53% 6.72% 7.92% 13.67%
Wholesale -0.05% 0.27% 1.26% 6.43% 4.85% 10.91%
Retail 0.01% 0.55% 2.23% 5.26% 7.70% 13.11%
Finance, Insurance, Real-Estate -0.00% 0.21% 1.41% 4.57% 5.01% 8.80%
Services -0.01% 0.47% 2.18% 5.02% 6.14% 10.69%
Public Administration 0.23% 0.06% 0.23% 0.92% 4.34% 5.54%
Energy -0.06% 0.25% 1.33% 11.35% 2.66% 7.45%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. UDR Inc. (USD) 2.1% 8/1/2032 (07/14/2020): 400MM Senior Unsecured Notes, Price at Issuance 99.894, Yielding 2.11%.

2. HP Enterprise Services LLC (USD) 1.75% 4/1/2026 (07/14/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.82, Yielding 1.78%.

3. HP Enterprise Services LLC (USD) 1.45% 4/1/2024 (07/14/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.883, Yielding 1.48%.

4. Canadian Imperial Bank of Commerce (CAD) VAR% 7/21/2030 (07/14/2020): 1000MM Subordinated Notes, Price at Issuance 99.962.

5. Tengizchevroil Finance Co. SAr.L (USD) 2.625% 8/15/2025 144A (07/15/2020): 500MM Secured Notes, Price at Issuance 99.412, Yielding 2.75%.

6. Tengizchevroil Finance Co. SAr.L (USD) 3.25% 8/15/2030 144A (07/15/2020): 750MM Secured Notes, Price at Issuance 98.939, Yielding 3.37%.

7. Multicare Health System (USD) 2.803% 8/15/2050 (07/15/2020): 300MM Unsecured Notes, Price at Issuance 100, Yielding 2.8%.

8. Drexel University (USD) 3.215% 5/1/2050 (07/15/2020): 104MM Unsecured Notes, Price at Issuance 100, Yielding 3.22%.

Additional Commentary

NEW ISSUANCE WATCH: on 07/15/2020 participants welcome a $400MM new corporate-bond offering by UDR Inc.
Top Widening Loans Top Narrowing Loans
Casper Bidco (EUR) TL E+850 07/30/2027
Unifrax Corp. (USD) TL2 L+850 12/14/2026
Distributed Power Inc. (EUR) TL E+800 11/02/2026
Automate Intermediate Hldg II Sarl (USD) TLB L+425 07/22/2026
Automate Intermediate Hldg II Sarl (EUR) TLB E+350 07/22/2026
Logoplaste (EUR) TLB E+400 10/31/2023
Tacala LLC (USD) TLB L+750 02/05/2028
ProFrac Services LLC (USD) TLB L+575 09/06/2023
Albertsons LLC (USD) TL L+275 11/17/2025
Orion EngineeRed Carbons Hldgs GmbH (USD) TLB L+200 07/25/2024

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