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North American Bond Research – June 1, 2020

Posted on June 1, 2020
HIGH YIELD BOND RESEARCH
June 1, 2020
Bond Markets

THE ECONOMY CONTINUES TO OPEN UP DESPITE THE CORONAVIRUS AND SOCIAL UNREST, DRIVING MARKETS UP. OIL IS UP TO $35.53 ON INCREASED NEED DUE TO AN OPENING ECONOMY. 10 Year Treasury notes were UP 1.4 basis points. S&P +0.38%, Dow +0.36%, NASDAQ +0.66%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 6.4 MILLION+ CASES AND 380000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 1.85 MILLION+ CASES AND 106500+ 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
+   Ford Motor Co. 9% 4/22/2025 +0.2%
  Ford Motor Co. 8.5% 4/21/2023 +0.6%
  Hospitality Properties Trust 5% 8/15/2022 +0.6%
  Freeport-McMoRan Inc. 4.125% 3/1/2028 +0.4%
  Freeport-McMoRan Inc. 5.25% 9/1/2029 +1.4%
–   Ford Motor Co. 4.75% 1/15/2043 -0.2%
  Crown Castle Intl Corp. 5.25% 1/15/2023 -0.1%
  General Motors Co. 4.875% 10/2/2023 -0.4%
  Gap Inc. 5.95% 4/12/2021 -0.2%
  Tesla Motors Inc. 5.3% 8/15/2025 Reg S -0.0%
Ford Motor Co.   9% 4/22/2025
Ford Motor Co.   8.5% 4/21/2023
Ford Motor Co.   4.75% 1/15/2043
Crown Castle Intl Corp.   5.25% 1/15/2023
Hospitality Properties Trust   5% 8/15/2022
Freeport-McMoRan Inc.   4.125% 3/1/2028
EnLink Midstream Partners LP   4.15% 6/1/2025
General Motors Co.   4.875% 10/2/2023
Freeport-McMoRan Inc.   5.25% 9/1/2029
USA Compression Partners LLC   6.875% 4/1/2026
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.01% 0.79% 2.71% -1.20% 0.05% 7.76%
Mining 0.01% 2.71% 18.68% -17.09% -21.75% -12.59%
Construction 0.24% 1.73% 4.72% -4.16% -2.49% 5.98%
Manufacturing 0.06% 1.60% 4.12% -4.27% -3.69% 4.36%
Transportion, Communication, Electric/Gas 0.00% 1.06% 4.15% -1.01% -0.20% 7.35%
Wholesale -0.02% 1.59% 6.77% -3.58% -3.89% 3.14%
Retail 0.10% 1.88% 5.17% -5.44% -5.25% 2.78%
Finance, Insurance, Real-Estate 0.15% 1.54% 3.27% -5.71% -5.27% 2.63%
Services 0.18% 1.83% 4.31% -4.34% -4.31% 4.64%
Public Administration 0.23% 1.93% 3.79% -3.70% -2.39% 5.82%
Energy 0.13% 2.84% 20.66% -13.43% -17.66% -9.98%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
 

 

(None Current 06/01/2020)
1. Assuredpartners Inc.: $300MM TLB (B)

2. Championx: $537MM TL

3. Eldorado Resorts Inc./Caesars Entertainment Corp.: $6.4B credit facilities:$1B revolver at Eldorados; $3B seven-year cove-lite TLB due 2027 at Eldorado; $2.4B seven-year cove-lite TLB due 2027 at Caesars Resorts Collection

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

5. Xplorenet Communictations Inc.: $1.425B credit facilities (B3/B-): $150MM revolver; $1.275B first-lien TL

6. Radio Systems Corp.: $725MM Loans: $100M ABL Facility; $625MM Senior secured bridge loan

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

8. Whole Earth Brands (ACT II GLOBAL ACQUISTION CORP.):: $235 MM credit facilities: $50MM reolver; $185MM term A

9. Xperi Corp. : $1.1B seven-year secured covenant lite TLB

10. Mohegan Tribal Gaming Authority: $100MM first lein TL (Caa1)

Additional Commentary

NEW ISSUANCE WATCH: No New Issues today.
Top Widening Loans Top Narrowing Loans
Arbor Pharmaceuticals LLC (USD) TLB L+500 07/05/2023
EG Group (GBP) TLB L+475 02/02/2025
Nets Hldgs AS (NOK) TLB1N L+400 02/06/2025
Red Lobster Management LLC (USD) TLB L+525 07/28/2021
Cast & Crew Payroll LLC (USD) TLB L+375 02/07/2026
Intertrust Group BV (GBP) TLA L+225 11/07/2023
G-III Apparel Group LTD (USD) TLB L+525 12/01/2022
ProAmpac LLC (USD) TL L+850 11/18/2024
Atlantic Aviation Fbo Inc. (USD) TLB L+375 12/06/2025
Hamilton Holdco LLC (USD) TLB L+200 01/02/2027

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 21 bp (basis points), as of 06/01/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
June 1, 2020
Bond Markets

THE ECONOMY CONTINUES TO OPEN UP DESPITE THE CORONAVIRUS AND SOCIAL UNREST, DRIVING MARKETS UP. OIL IS UP TO $35.53 ON INCREASED NEED DUE TO AN OPENING ECONOMY. 10 Year Treasury notes were UP 1.4 basis points. S&P +0.38%, Dow +0.36%, NASDAQ +0.66%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 6.4 MILLION+ CASES AND 380000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 1.85 MILLION+ CASES AND 106500+ 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
+   Boeing Co. 5.805% 5/1/2050 +1.1%
  Wells Fargo & Co. VAR% 6/2/2028 +0.3%
  Boeing Co. 5.93% 5/1/2060 +0.9%
  Boeing Co. 5.15% 5/1/2030 +0.1%
  Marriott Intl Inc. 4.625% 6/15/2030 +0.9%
–   Total Capital SA 3.127% 5/29/2050 -0.9%
  Honeywell Intl. Inc. 1.35% 6/1/2025 -0.2%
  Bank of New York Mellon Corp. 2.05% 5/3/2021 -0.2%
  Oracle Corp. 3.6% 4/1/2040 -0.2%
  Oracle Corp. 3.85% 4/1/2060 -0.4%
Boeing Co.   5.805% 5/1/2050
Total Capital SA   3.127% 5/29/2050
Wells Fargo & Co.   VAR% 6/2/2028
Boeing Co.   5.93% 5/1/2060
Boeing Co.   5.15% 5/1/2030
Marriott Intl Inc.   4.625% 6/15/2030
Honeywell Intl. Inc.   1.35% 6/1/2025
AT&T Inc.   3.85% 6/1/2060
Morgan Stanley   2.188% 4/28/2026
Southwest Airlines Co.   1.25% 5/1/2025
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.30% 1.41% 5.89% -2.96% -0.52% 7.00%
Construction 0.22% 1.22% 2.68% -2.45% 1.07% 6.61%
Manufacturing 0.14% 0.49% 1.21% 0.28% 3.68% 11.14%
Transportion, Communication, Electric/Gas 0.24% 0.65% 1.09% -0.18% 4.04% 12.41%
Wholesale 0.13% 0.73% 1.62% -0.85% 1.84% 9.31%
Retail 0.23% 0.53% 1.13% 0.76% 4.32% 12.62%
Finance, Insurance, Real-Estate 0.13% 0.50% 1.12% -0.41% 2.41% 8.14%
Services 0.20% 0.53% 0.81% -0.17% 3.43% 10.31%
Public Administration 0.06% 0.07% 0.25% 2.12% 4.20% 5.95%
Energy 0.31% 1.48% 6.26% -2.44% -0.18% 7.00%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Wrkco Inc. (USD) 3% 6/15/2033 (06/01/2020): 600MM Senior Unsecured Notes, Price at Issuance 99.764, Yielding 3.02%.

2. Agilent Technologies Inc. (USD) 2.1% 6/4/2030 (06/01/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.812, Yielding 2.12%.

3. PECO Energy Co. (USD) 2.8% 6/15/2050 (06/01/2020): 350MM Secured Notes, Price at Issuance 99.899, Yielding 2.8%.

4. Met Life Global Funding Inc. (USD) 0.9% 6/8/2023 144A (06/01/2020): 1000MM Secured Notes, Price at Issuance 99.855, Yielding .95%.

5. PACCAR Financial Corp. (USD) 0.8% 6/8/2023 (06/01/2020): 300MM Senior Unsecured Notes, Price at Issuance 99.861, Yielding .85%.

6. John Deere Capital Corp. (USD) 0.55% 7/5/2022 (06/01/2020): 450MM Senior Unsecured Notes, Price at Issuance 99.979, Yielding .56%.

7. John Deere Capital Corp. (USD) 0.7% 7/5/2023 (06/01/2020): 450MM Senior Unsecured Notes, Price at Issuance 99.918, Yielding .73%.

8. Southwest Gas Corp. (USD) 2.2% 6/15/2030 (06/01/2020): 450MM Senior Unsecured Notes, Price at Issuance 99.874, Yielding 2.21%.

9. Ralph Lauren Corp. (USD) 1.7% 6/15/2022 (06/01/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.88, Yielding 1.76%.

10. Ralph Lauren Corp. (USD) 2.95% 6/15/2030 (06/01/2020): 750MM Senior Unsecured Notes, Price at Issuance 98.995, Yielding 3.07%.

Additional Commentary

NEW ISSUANCE WATCH: on 06/01/2020 participants welcome a $1250MM new corporate-bond offering by Ralph Lauren Corp.
Top Widening Loans Top Narrowing Loans
Arbor Pharmaceuticals LLC (USD) TLB L+500 07/05/2023
EG Group (GBP) TLB L+475 02/02/2025
Nets Hldgs AS (NOK) TLB1N L+400 02/06/2025
Red Lobster Management LLC (USD) TLB L+525 07/28/2021
Cast & Crew Payroll LLC (USD) TLB L+375 02/07/2026
Intertrust Group BV (GBP) TLA L+225 11/07/2023
G-III Apparel Group LTD (USD) TLB L+525 12/01/2022
ProAmpac LLC (USD) TL L+850 11/18/2024
Atlantic Aviation Fbo Inc. (USD) TLB L+375 12/06/2025
Hamilton Holdco LLC (USD) TLB L+200 01/02/2027

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 21 bp (basis points), as of 06/01/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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