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North American Bond Research – July 20, 2020

Posted on July 20, 2020
HIGH YIELD BOND RESEARCH
July 20, 2020
Bond Markets

MARKETS MIXED TO UP AS OXFORD AND ASTRAZENECA PUBLISHED PROMISING RESULTS FOR A VACCINE FOR THE CORONA VIRUS. AMAZON WAS ALSO A KEY DRIVER AS GOLDMAN PUSHED TARGETS UP 30%+. 10 Year Treasury notes were down .8 bps. S&P +0.84%, Dow -0.03%, NASDAQ +2.51%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 14.9 MILLION+ CASES AND 612000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 4 MILLION+ CASES AND 144000+ 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. 4.55% 7/1/2030 +0.6%
  Pacific Gas & Electric Co. 3.3% 12/1/2027 +1.0%
  T-Mobile USA Inc. 3.875% 4/15/2030 144A +0.0%
  Pacific Gas & Electric Co. 3.95% 12/1/2047 +0.2%
  Pacific Gas & Electric Co. 4.75% 2/15/2044 +0.9%
–   Pacific Gas & Electric Co. 4.95% 7/1/2050 -0.1%
  T-Mobile USA Inc. 3.5% 4/15/2025 144A -0.1%
  Enbridge Inc. 5.75% 7/15/2080 -0.4%
  T-Mobile USA Inc. 4.5% 2/1/2026 -0.6%
  Plains All American Pipeline LP 4.65% 10/15/2025 -1.5%
Pacific Gas & Electric Co.   4.55% 7/1/2030
Pacific Gas & Electric Co.   3.3% 12/1/2027
Pacific Gas & Electric Co.   4.95% 7/1/2050
T-Mobile USA Inc.   3.5% 4/15/2025 144A
T-Mobile USA Inc.   3.875% 4/15/2030 144A
Pacific Gas & Electric Co.   3.95% 12/1/2047
Pacific Gas & Electric Co.   4.75% 2/15/2044
Ford Motor Co.   8.5% 4/21/2023
Freeport-McMoRan Inc.   4.625% 8/1/2030
Pacific Gas & Electric Co.   3.45% 7/1/2025
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.13% 1.18% 1.20% 5.39% 2.79% 6.96%
Mining -0.09% 0.87% -1.40% 22.82% -16.17% -10.51%
Construction 0.15% 0.68% 1.00% 7.78% 0.69% 5.79%
Manufacturing 0.04% 0.84% 0.67% 6.75% -0.31% 4.99%
Transportion, Communication, Electric/Gas 0.10% 0.75% 0.44% 5.93% 1.82% 6.06%
Wholesale 0.02% 0.64% -0.06% 11.22% -0.68% 3.50%
Retail 0.06% 0.76% -0.03% 7.54% -3.08% 1.64%
Finance, Insurance, Real-Estate 0.04% 0.62% 0.44% 7.03% -1.26% 3.73%
Services 0.10% 0.89% -0.34% 5.33% -1.10% 4.76%
Public Administration 0.02% 0.33% 0.53% 11.67% 1.69% 6.48%
Energy -0.01% 0.99% -1.28% 22.92% -13.24% -8.93%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Powdr Corp. (USD) 6% 8/1/2025 144A (07/20/2020): 300MM Secured Notes.

2. Wyndham Destinations Inc (USD) 6.625% 7/31/2026 144A (07/20/2020): 650MM Secured Notes, Price at Issuance 100, Yielding 6.63%.

3. Powdr Corp. (USD) 6% 8/1/2025 Reg S (07/20/2020): 300MM Secured Notes.

4. Wyndham Destinations Inc (USD) 6.625% 7/31/2026 Reg S (07/20/2020): 650MM Secured Notes, Price at Issuance 100, Yielding 6.63%.

1. Huntsworth PLC: $300MM TL

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

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

4. Caesars Resort Collection LLC: $1.8B TL (B1/B+)

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

6. First Brands Group LLC: $710MM TL

7. 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+)

8. Sequa Corp.: $200MM TL

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

10. Tosca Services LLC: $536.5MM TL

Additional Commentary

NEW ISSUANCE WATCH: Powdr Corp issued $300MM in notes.
Top Widening Loans Top Narrowing Loans
Casper Bidco (EUR) TL E+850 07/30/2027
TMF Group Hldg B.V. (EUR) TL2 E+687.5 06/08/2026
Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027
Diebold Inc. (USD) TLA L+925 08/30/2022
PDC Brands (USD) TLB L+425 06/30/2024
American Tire Distributors Inc. (USD) TL DIP PIK L+600 09/01/2023
Mavenir Inc. (USD) TLB L+600 05/08/2025
NCL Corp. LTD (USD) TLA L+150 01/02/2024
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
Distributed Power Inc. (USD) TLB L+325 11/02/2025

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 16 bp (basis points), as of 07/20/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
July 20, 2020
Bond Markets

MARKETS MIXED TO UP AS OXFORD AND ASTRAZENECA PUBLISHED PROMISING RESULTS FOR A VACCINE FOR THE CORONA VIRUS. AMAZON WAS ALSO A KEY DRIVER AS GOLDMAN PUSHED TARGETS UP 30%+. 10 Year Treasury notes were down .8 bps. S&P +0.84%, Dow -0.03%, NASDAQ +2.51%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 14.9 MILLION+ CASES AND 612000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 4 MILLION+ CASES AND 144000+ 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. 4.55% 7/1/2030 +0.6%
  Noble Energy Inc. 4.95% 8/15/2047 +34.5%
  National Australia Bank/NY 1.875% 7/12/2021 +0.0%
  General Electric Co. 4.35% 5/1/2050 +2.3%
  CVS Health Corp. 4.3% 3/25/2028 +0.2%
–   Bank of America Corp. VAR% 6/19/2041 -1.3%
  Dupont de Nemours Inc. 2.169% 5/1/2023 -0.1%
  Pacific Gas & Electric Co. 4.95% 7/1/2050 -0.1%
  Southwest Airlines Co. 5.25% 5/4/2025 -0.6%
  Bank of America Corp. VAR% 10/22/2025 -0.3%
Bank of America Corp.   VAR% 6/19/2041
Pacific Gas & Electric Co.   4.55% 7/1/2030
Dupont de Nemours Inc.   2.169% 5/1/2023
Pacific Gas & Electric Co.   4.95% 7/1/2050
Southwest Airlines Co.   5.25% 5/4/2025
Noble Energy Inc.   4.95% 8/15/2047
Bank of America Corp.   VAR% 10/22/2025
US Bancorp   1.375% 7/22/2030
Bank of America Corp.   2.496% 2/13/2031
National Australia Bank/NY   1.875% 7/12/2021
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.12% 0.64% 1.53% 10.86% 3.24% 7.62%
Construction 0.15% 0.42% 1.90% 6.64% 4.03% 7.53%
Manufacturing 0.16% 0.53% 1.95% 4.69% 6.85% 11.11%
Transportion, Communication, Electric/Gas 0.18% 0.75% 2.60% 5.83% 8.48% 13.63%
Wholesale 0.15% 0.57% 1.05% 5.74% 5.10% 10.53%
Retail 0.14% 0.57% 2.15% 4.83% 8.39% 13.90%
Finance, Insurance, Real-Estate 0.12% 0.30% 1.24% 4.34% 5.24% 8.78%
Services 0.10% 0.43% 1.86% 4.65% 6.18% 10.19%
Public Administration 0.24% 0.33% 0.33% 0.85% 4.45% 5.67%
Energy 0.16% 0.57% 1.23% 10.47% 3.10% 7.47%
 
Total returns (non-annualized) by rating, market weighted.
New Issues New Issues [Continued]
1. FLIR Systems Inc. (USD) 2.5% 8/1/2030 (07/20/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.807, Yielding 2.52%.
Additional Commentary

NEW ISSUANCE WATCH: on 07/17/2020 participants welcome a $500MM new corporate-bond offering by FLIR Systems Inc.
Top Widening Loans Top Narrowing Loans
Casper Bidco (EUR) TL E+850 07/30/2027
TMF Group Hldg B.V. (EUR) TL2 E+687.5 06/08/2026
Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027
Diebold Inc. (USD) TLA L+925 08/30/2022
PDC Brands (USD) TLB L+425 06/30/2024
American Tire Distributors Inc. (USD) TL DIP PIK L+600 09/01/2023
Mavenir Inc. (USD) TLB L+600 05/08/2025
NCL Corp. LTD (USD) TLA L+150 01/02/2024
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
Distributed Power Inc. (USD) TLB L+325 11/02/2025

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 16 bp (basis points), as of 07/20/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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