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North American Bond Research – July 29, 2020

Posted on July 29, 2020
HIGH YIELD BOND RESEARCH
July 29, 2020
Bond Markets

MARKETS MIXED TO HIGHER AS CEO’S OF BIG TECH COMPANIES TESTIFY TO CONGRESS AS TO ANTI-COMPETITION CONCERNS. FED TO KEEP POLICY STEADY FOR THE NEXT 6 MONTHS. 10 Year Treasury notes were down 2.8 bps. S&P +1.24%, Dow +0.61%, NASDAQ +1.35%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 17.1 MILLION+ CASES AND 667000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 4.6 MILLION+ CASES AND 154000+ 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 +0.1%
  Pacific Gas & Electric Co. 3.5% 6/15/2025 +3.0%
  Pacific Gas & Electric Co. 4.95% 7/1/2050 +0.4%
  Ford Motor Co. 9% 4/22/2025 +0.4%
  T-Mobile USA Inc. 3.5% 4/15/2025 144A +0.0%
–   Pacific Gas & Electric Co. 3.75% 7/1/2028 -0.2%
  Pacific Gas & Electric Co. 3.3% 12/1/2027 -0.0%
  Pacific Gas & Electric Co. 4.3% 3/15/2045 -3.6%
  Pacific Gas & Electric Co. 4.25% 3/15/2046 -0.5%
  Pacific Gas & Electric Co. 4% 12/1/2046 -0.0%
Pacific Gas & Electric Co.   4.55% 7/1/2030
Pacific Gas & Electric Co.   3.5% 6/15/2025
Pacific Gas & Electric Co.   4.95% 7/1/2050
Pacific Gas & Electric Co.   3.75% 7/1/2028
Ford Motor Co.   9% 4/22/2025
T-Mobile USA Inc.   3.5% 4/15/2025 144A
Pacific Gas & Electric Co.   3.3% 12/1/2027
Pacific Gas & Electric Co.   4.3% 3/15/2045
Pacific Gas & Electric Co.   4% 12/1/2046
Pacific Gas & Electric Co.   4.25% 3/15/2046
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.00% 0.90% 3.35% 7.71% 4.33% 8.57%
Mining 0.01% 0.87% 3.38% 28.37% -13.66% -8.37%
Construction 0.16% 0.84% 3.12% 10.94% 2.97% 7.80%
Manufacturing -0.02% 0.63% 3.20% 10.37% 0.57% 5.71%
Transportion, Communication, Electric/Gas -0.03% 0.54% 2.77% 8.69% 3.23% 6.79%
Wholesale 0.05% 0.71% 2.19% 13.22% 0.68% 4.42%
Retail 0.00% 0.90% 3.85% 12.15% -0.59% 3.39%
Finance, Insurance, Real-Estate -0.01% 0.65% 2.45% 9.90% -0.02% 4.18%
Services -0.05% 0.60% 2.76% 9.10% 0.85% 5.73%
Public Administration 0.02% 0.72% 2.26% 10.54% 3.20% 7.43%
Energy 0.01% 1.06% 3.80% 28.59% -10.59% -6.27%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Cenovus Energy Inc. (USD) 5.375% 7/15/2025 (07/28/2020): 1000MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.38%.

2. GPC Merger Sub Inc. (USD) 7.125% 8/15/2028 144A (07/28/2020): 510MM Senior Unsecured Notes, Price at Issuance 100, Yielding 7.13%.

1. Concord : $850MM credit facilities (B1/BB-): $450MM revolver; $400MM TLB

2. Blue Yonder: $620MM TLB

3. Aldevron LLC: $50MM TL (B1/B)

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

5. Sequa Corp.: $200MM TL

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

7. Huntsworth PLC: $300MM 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. Empire Resorts Inc.: $475MM senior secured notes (B+/B+)

10. NRG Energy Inc.: $2361MM secured and unsecured notes

Additional Commentary

NEW ISSUANCE WATCH: GPC Merger Sub Inc.issued $1000MM in notes.
Top Widening Loans Top Narrowing Loans
Inmar Inc. (USD) TL L+350 05/01/2024
Affidea BV (EUR) TLB E+375 12/04/2026
IPH Group (EUR) TLB E+425 09/08/2024
American Tire Distributors Inc. (USD) TL DIP PIK L+600 09/01/2023
Safe Fleet Acquisition Corp. (USD) TL L+675 02/01/2026
NCL Corp. LTD (USD) TLA L+150 01/02/2024
TCW Group (USD) TLB L+175 12/27/2024
Mavenir Inc. (USD) TLB L+600 05/08/2025
ConvergeOne LLC (USD) TL L+500 01/04/2026
Tacala LLC (USD) TLB L+350 02/05/2027

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 bp (basis points), as of 07/29/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
July 29, 2020
Bond Markets

MARKETS MIXED TO HIGHER AS CEO’S OF BIG TECH COMPANIES TESTIFY TO CONGRESS AS TO ANTI-COMPETITION CONCERNS. FED TO KEEP POLICY STEADY FOR THE NEXT 6 MONTHS. 10 Year Treasury notes were down 2.8 bps. S&P +1.24%, Dow +0.61%, NASDAQ +1.35%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 17.1 MILLION+ CASES AND 667000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 4.6 MILLION+ CASES AND 154000+ 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
+   AT&T Inc. 2.25% 2/1/2032 +1.3%
  AT&T Inc. 3.3% 2/1/2052 +1.5%
  AT&T Inc. 3.1% 2/1/2043 +1.5%
  AT&T Inc. 1.65% 2/1/2028 +0.1%
  AT&T Inc. 3.5% 2/1/2061 +1.8%
–   Anheuser-Busch Inbev Worldwide Inc. 4.5% 6/1/2050 -0.2%
  Altria Group Inc. 3.875% 9/16/2046 -0.8%
  Pacific Gas & Electric Co. 3.5% 8/1/2050 -0.1%
  Boeing Co. 5.805% 5/1/2050 -0.3%
  Pacific Gas & Electric Co. 3.75% 7/1/2028 -0.2%
AT&T Inc.   2.25% 2/1/2032
AT&T Inc.   3.3% 2/1/2052
AT&T Inc.   3.1% 2/1/2043
AT&T Inc.   1.65% 2/1/2028
AT&T Inc.   3.5% 2/1/2061
Anheuser-Busch Inbev Worldwide Inc.   4.5% 6/1/2050
Pacific Gas & Electric Co.   4.55% 7/1/2030
Southwest Airlines Co.   5.125% 6/15/2027
Pacific Gas & Electric Co.   3.5% 8/1/2050
Altria Group Inc.   3.875% 9/16/2046
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.02% 0.68% 3.85% 13.03% 5.89% 9.96%
Construction 0.06% 0.65% 2.31% 7.00% 5.08% 7.99%
Manufacturing 0.04% 0.44% 2.69% 5.82% 7.81% 11.93%
Transportion, Communication, Electric/Gas 0.01% 0.67% 3.66% 6.98% 9.84% 14.48%
Wholesale 0.07% 0.44% 2.18% 6.83% 6.46% 11.56%
Retail -0.01% 0.32% 2.73% 5.78% 9.33% 14.50%
Finance, Insurance, Real-Estate 0.05% 0.37% 1.71% 5.01% 6.01% 9.40%
Services 0.01% 0.44% 2.57% 5.43% 7.11% 10.93%
Public Administration 0.30% 0.07% 0.45% 0.81% 4.56% 5.76%
Energy 0.03% 0.68% 3.32% 12.96% 5.23% 9.36%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Florida Power & Light (USD) FLT% 7/28/2023 (07/28/2020): 1250MM Senior Unsecured Notes, Price at Issuance 100.

2. Reliance Steel & Aluminum Co. (USD) 2.15% 8/15/2030 (07/28/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.722, Yielding 2.18%.

3. Children’s Health System Of Texas (USD) 2.511% 8/15/2050 (07/28/2020): 445MM Unsecured Notes, Price at Issuance 100, Yielding 2.51%.

4. Reliance Steel & Aluminum Co. (USD) 1.3% 8/15/2025 (07/28/2020): 400MM Senior Unsecured Notes, Price at Issuance 99.694, Yielding 1.36%.

5. Midwestone Financial Group Inc. (USD) VAR% 7/30/2030 (07/28/2020): 65MM Subordinated Notes, Price at Issuance 100.

6. Midwestone Financial Group Inc. (USD) VAR% 7/30/2030 (07/28/2020): 65MM Subordinated Notes, Price at Issuance 100.

7. Alexandria Real Estate Equities Inc. (USD) 1.875% 2/1/2033 (07/29/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.812, Yielding 1.89%.

8. Reliance LP (CAD) 2.68% 12/1/2027 (07/29/2020): 430MM Secured Notes, Price at Issuance 99.982, Yielding 2.68%.

Additional Commentary

NEW ISSUANCE WATCH: on 07/29/2020 participants welcome a $1250MM new corporate-bond offering by
Florida Power & Light.
Top Widening Loans Top Narrowing Loans
Inmar Inc. (USD) TL L+350 05/01/2024
Affidea BV (EUR) TLB E+375 12/04/2026
IPH Group (EUR) TLB E+425 09/08/2024
American Tire Distributors Inc. (USD) TL DIP PIK L+600 09/01/2023
Safe Fleet Acquisition Corp. (USD) TL L+675 02/01/2026
NCL Corp. LTD (USD) TLA L+150 01/02/2024
TCW Group (USD) TLB L+175 12/27/2024
Mavenir Inc. (USD) TLB L+600 05/08/2025
ConvergeOne LLC (USD) TL L+500 01/04/2026
Tacala LLC (USD) TLB L+350 02/05/2027

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 bp (basis points), as of 07/29/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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