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North American Bond Research – July 23, 2020

Posted on July 23, 2020
HIGH YIELD BOND RESEARCH
July 23, 2020
Bond Markets

JOBLESS CLAIMS ROSE FROM THE PREVIOUS WEEK TO 1.42 MILLION UNEMPLOYED. EUROPEAN MARKETS WERE MUTED WHILE US MARKETS FELL. ANOTHER STIMULUS CHECK IS PLANNED FOR AUGUST. 10 Year Treasury notes were down 1.3 bps. S&P -1.23%, Dow -1.31%, NASDAQ -2.29%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 15.6 MILLION+ CASES AND 635000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 4.15 MILLION+ CASES AND 147000+ 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 +0.0%
  T-Mobile USA Inc. 3.875% 4/15/2030 144A +0.1%
  T-Mobile USA Inc. 3.5% 4/15/2025 144A +0.1%
  Pacific Gas & Electric Co. 4.95% 7/1/2050 +0.7%
  Navient Corp. 5% 3/15/2027 +0.9%
–   Pacific Gas & Electric Co. 3.45% 7/1/2025 -0.0%
  Petrobras Global Finance BV 6.85% 6/5/2115 -2.0%
  Pacific Gas & Electric Co. 4.25% 8/1/2023 -0.2%
  Ford Motor Co. 9% 4/22/2025 -8.8%
  Ford Motor Co. 8.5% 4/21/2023 -0.6%
Pacific Gas & Electric Co.   4.55% 7/1/2030
T-Mobile USA Inc.   3.875% 4/15/2030 144A
T-Mobile USA Inc.   3.5% 4/15/2025 144A
Pacific Gas & Electric Co.   4.95% 7/1/2050
Pacific Gas & Electric Co.   3.45% 7/1/2025
Petrobras Global Finance BV   6.85% 6/5/2115
Navient Corp.   5% 3/15/2027
Pacific Gas & Electric Co.   4.25% 8/1/2023
Pacific Gas & Electric Co.   3.75% 7/1/2028
T-Mobile USA Inc.   3.75% 4/15/2027 144A
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.34% 1.43% 2.43% 6.29% 3.84% 7.99%
Mining 0.33% 1.61% 0.63% 32.21% -14.46% -9.10%
Construction 0.10% 1.10% 1.73% 9.78% 1.42% 6.42%
Manufacturing 0.21% 1.30% 1.82% 9.48% 0.34% 5.97%
Transportion, Communication, Electric/Gas 0.16% 1.16% 1.46% 7.98% 2.70% 6.69%
Wholesale 0.13% 1.02% 1.10% 12.30% -0.02% 4.00%
Retail 0.14% 1.22% 1.52% 10.25% -1.90% 2.59%
Finance, Insurance, Real-Estate 0.23% 1.40% 1.56% 9.38% -0.66% 4.09%
Services 0.23% 1.38% 1.16% 7.34% 0.14% 5.36%
Public Administration 0.42% 1.23% 1.74% 9.82% 2.89% 8.19%
Energy 0.35% 1.79% 0.88% 30.87% -11.65% -7.25%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 07/23/2020)
1. First Brands Group LLC: $710MM TL

2. Huntsworth PLC: $300MM TL

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

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

5. Ryan Specialty Group LLC: $1.65B (B1/B)

6. Sequa Corp.: $200MM TL

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

8. 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+)

9. Huntsworth PLC: $300MM TL

10. Tosca Services LLC: $536.5MM TL

11. EMPTY PLACEHOLDER: EMPTY

Additional Commentary

NEW ISSUANCE WATCH: No new issues.
Top Widening Loans Top Narrowing Loans
EG Group (USD) TL L+800 03/23/2026
Affinion Group Inc. (USD) TL L+775 05/10/2022
American Tire Distributors Inc. (USD) TL DIP PIK L+600 09/01/2023
TCW Group (USD) TLB L+175 12/27/2024
Grosvenor Capital Mgmt Hldg LLP (USD) TLB L+275 03/29/2025
NCL Corp. LTD (USD) TLA L+150 01/02/2024
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
Global Tel Link Corp. (USD) TL L+425 11/29/2025
Specialty Chemical Resources Inc. (EUR) TLB1 E+450 03/05/2027
Carrols Restaurant Group (USD) TLB1 L+625 04/30/2026

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 07/23/2020
  • Net negative capital flows into high-yield ETFs & mutual funds
INVESTMENT GRADE BOND RESEARCH
July 23, 2020
Bond Markets

JOBLESS CLAIMS ROSE FROM THE PREVIOUS WEEK TO 1.42 MILLION UNEMPLOYED. EUROPEAN MARKETS WERE MUTED WHILE US MARKETS FELL. ANOTHER STIMULUS CHECK IS PLANNED FOR AUGUST. 10 Year Treasury notes were down 1.3 bps. S&P -1.23%, Dow -1.31%, NASDAQ -2.29%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 15.6 MILLION+ CASES AND 635000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 4.15 MILLION+ CASES AND 147000+ 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
+   Bank of America Corp. VAR% 6/19/2041 +0.7%
  Bank of America Corp. 1.898% 7/23/2031 +0.3%
  Boeing Co. 5.805% 5/1/2050 +0.6%
  Pacific Gas & Electric Co. 4.55% 7/1/2030 +0.0%
  Citigroup Inc. 2.572% 6/3/2031 +0.0%
–   Pacific Gas & Electric Co. 3.15% 1/1/2026 -0.2%
  Caterpillar Inc. 3.25% 4/9/2050 -0.1%
  GE Capital Intl. Funding Co. 4.418% 11/15/2035 -0.5%
  AT&T Inc. 3.85% 6/1/2060 -0.3%
  CVS Health Corp. 4.3% 3/25/2028 -0.2%
Bank of America Corp.   VAR% 6/19/2041
Bank of America Corp.   1.898% 7/23/2031
Boeing Co.   5.805% 5/1/2050
Pacific Gas & Electric Co.   3.15% 1/1/2026
Pacific Gas & Electric Co.   4.55% 7/1/2030
Caterpillar Inc.   3.25% 4/9/2050
Citigroup Inc.   2.572% 6/3/2031
Marriott Intl Inc.   5.75% 5/1/2025
JP Morgan Chase & Co.   4.6% PERP
Oracle Corp.   3.85% 4/1/2060
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.25% 1.17% 2.76% 13.15% 5.21% 9.40%
Construction 0.22% 1.13% 2.27% 8.18% 4.90% 8.01%
Manufacturing 0.19% 0.89% 2.35% 5.65% 7.60% 11.58%
Transportion, Communication, Electric/Gas 0.26% 1.15% 3.08% 6.79% 9.36% 14.09%
Wholesale 0.17% 0.99% 1.44% 6.77% 5.86% 11.02%
Retail 0.21% 1.00% 2.57% 5.80% 9.26% 14.45%
Finance, Insurance, Real-Estate 0.12% 0.52% 1.43% 4.90% 5.72% 9.03%
Services 0.17% 0.75% 2.19% 5.17% 6.88% 10.53%
Public Administration -0.23% -0.17% 0.08% 0.57% 4.24% 5.30%
Energy 0.26% 1.17% 2.22% 12.79% 4.59% 8.71%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Mizuho Securities USA Inc. (USD) FLT% 8/23/2021 (07/22/2020): 85MM Senior Unsecured Notes, Price at Issuance 100.

2. Lennox International Inc. (USD) 1.35% 8/1/2025 (07/22/2020): 300MM Senior Unsecured Notes, Price at Issuance 99.908, Yielding 1.37%.

3. Lennox International Inc. (USD) 1.7% 8/1/2027 (07/22/2020): 300MM Senior Unsecured Notes, Price at Issuance 99.705, Yielding 1.74%.

4. Andrew W Mellon Foundation (USD) 0.947% 8/1/2027 (07/22/2020): 300MM Unsecured Notes, Price at Issuance 100, Yielding .95%.

5. Swedish Export Credit (USD) 0.375% 7/30/2024 (07/23/2020): 600MM Unsecured Notes.

Additional Commentary

NEW ISSUANCE WATCH: on 07/23/2020 participants welcome an $85MM new corporate-bond offering by
Mizuho Securities USA Inc.
Top Widening Loans Top Narrowing Loans
EG Group (USD) TL L+800 03/23/2026
Affinion Group Inc. (USD) TL L+775 05/10/2022
American Tire Distributors Inc. (USD) TL DIP PIK L+600 09/01/2023
TCW Group (USD) TLB L+175 12/27/2024
Grosvenor Capital Mgmt Hldg LLP (USD) TLB L+275 03/29/2025
NCL Corp. LTD (USD) TLA L+150 01/02/2024
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
Global Tel Link Corp. (USD) TL L+425 11/29/2025
Specialty Chemical Resources Inc. (EUR) TLB1 E+450 03/05/2027
Carrols Restaurant Group (USD) TLB1 L+625 04/30/2026

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 07/23/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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