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North American Bond Research – June 11, 2020

Posted on June 11, 2020
HIGH YIELD BOND RESEARCH
June 11, 2020
Bond Markets

MARKETS CRASHED TODAY AS 1.5MM MORE WORKERS FILED FOR UNEMPLOYMENT. SECOND CORONAVIRUS WAVE FEARED PROBABLE. PUSH FOR MORE STIMULUS MONEY IS IN THE WORKS. 10 Year Treasury notes were down 9.5 basis points. S&P -5.89%, Dow -6.9%, NASDAQ –5.27%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 7.6 MILLION+ CASES AND 422000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 2.1 MILLION+ CASES AND 116000+ 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
+   Manitowoc Foodservice Inc. 9.5% 2/15/2024 +2.4%
  Equinix Inc. 5.875% 1/15/2026 +0.2%
  Goldman Sachs Capital Ii 5.793% 6/1/2043 +0.8%
  Simmons First National Corp. VAR% 4/1/2028 +2.6%
  Summit Midstream Hldg LLC 5.75% 4/15/2025 +23.2%
–   T-Mobile USA Inc. 3.875% 4/15/2030 144A -1.1%
  Ford Motor Co. 8.5% 4/21/2023 -2.1%
  Ford Motor Co. 9.625% 4/22/2030 -1.1%
  T-Mobile USA Inc. 3.5% 4/15/2025 144A -0.9%
  General Motors Co. 6.25% 10/2/2043 -1.3%
T-Mobile USA Inc.   3.875% 4/15/2030 144A
Ford Motor Co.   8.5% 4/21/2023
Ford Motor Co.   9.625% 4/22/2030
T-Mobile USA Inc.   3.5% 4/15/2025 144A
General Motors Co.   6.25% 10/2/2043
Chesapeake Energy Corp.   11.5% 1/1/2025 Reg S
Ford Motor Co.   9% 4/22/2025
Hertz Corp.   6.25% 10/15/2022
Occidental Petroleum Corp.   6.6% 3/15/2046
Dollar General Corp.   3.25% 4/15/2023
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.12% 1.11% 3.90% 2.72% 1.96% 8.48%
Mining -0.26% 3.61% 25.95% 0.83% -16.57% -9.53%
Construction -0.09% 0.88% 6.02% -0.98% -0.45% 6.76%
Manufacturing -0.16% 1.29% 7.34% 0.03% -0.92% 5.56%
Transportion, Communication, Electric/Gas -0.13% 0.69% 5.57% 2.25% 1.55% 7.72%
Wholesale -0.07% 1.65% 5.79% 1.85% -1.58% 4.11%
Retail -0.16% 1.84% 8.42% -1.71% -2.58% 3.68%
Finance, Insurance, Real-Estate -0.05% 1.50% 6.67% -1.39% -1.97% 4.54%
Services -0.17% 0.96% 7.51% 0.04% -0.71% 6.21%
Public Administration -0.08% 2.30% 6.37% 0.79% 0.64% 7.99%
Energy -0.14% 3.66% 23.04% 3.49% -12.98% -7.42%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Dolya Holdco 18 Dac (USD) 5% 7/15/2028 144A (06/10/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5%.

2. Dolya Holdco 18 Dac (USD) 5% 7/15/2028 Reg S (06/10/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5%.

3. New Gold Inc. (USD) 7.5% 7/15/2027 Reg S (06/10/2020): 400MM Senior Unsecured Notes, Price at Issuance 100, Yielding 7.5%.

4. Delta Airlines (USD) 7.375% 1/15/2026 (06/10/2020): 1250MM Senior Unsecured Notes, Price at Issuance 99.986, Yielding 7.38%.

5. Level 3 Financing Inc. (USD) 4.25% 7/1/2028 (06/10/2020): 1200MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.25%.

6. Acadia Healthcare (USD) 5.5% 7/1/2028 144A (06/10/2020): 450MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.5%.

7. Level 3 Financing Inc. (USD) 4.25% 7/1/2028 Reg S (06/10/2020): 1200MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.25%.

8. Acadia Healthcare (USD) 5.5% 7/1/2028 Reg S (06/10/2020): 450MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.5%.

9. Great Southern Bancorp Inc. (USD) VAR% 6/15/2030 (06/10/2020): 75MM Subordinated Notes, Price at Issuance 100.

10. New Gold Inc. (USD) 7.5% 7/15/2027 144A (06/10/2020): 400MM Senior Unsecured Notes, Price at Issuance 100, Yielding 7.5%.

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

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

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

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

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

6. 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

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

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

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

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

Additional Commentary

NEW ISSUANCE WATCH: Dolya Holdco issued $500MM in notes.
Top Widening Loans Top Narrowing Loans
Moneygram Intl. Inc. (USD) TLB L+600 06/30/2023
Dubois Chemicals Inc. (USD) TL L+850 10/08/2027
Lully Finance Sarl (EUR) TL E+375 10/31/2022
American Gaming Systems (USD) TLB L+350 02/15/2024
Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027
CB Richard Ellis Services Inc. (USD) TLA L+100 03/04/2024
Global TIP Finance BV (EUR) TL 11/21/2026
NCL Corp. LTD (USD) TLA L+150 01/02/2024
Ahlsell AB (EUR) TL E+825 03/01/2027
Koninklijke Ten Cate NV (EUR) TLB E+350 01/27/2023

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 06/11/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
June 11, 2020
Bond Markets

MARKETS CRASHED TODAY AS 1.5MM MORE WORKERS FILED FOR UNEMPLOYMENT. SECOND CORONAVIRUS WAVE FEARED PROBABLE. PUSH FOR MORE STIMULUS MONEY IS IN THE WORKS. 10 Year Treasury notes were down 9.5 basis points. S&P -5.89%, Dow -6.9%, NASDAQ –5.27%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 7.6 MILLION+ CASES AND 422000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 2.1 MILLION+ CASES AND 116000+ 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
+   Amazon.com Inc. 2.5% 6/3/2050 +0.0%
  Pfizer Inc. 2.7% 5/28/2050 +1.3%
  Pfizer Inc. 1.7% 5/28/2030 +0.0%
  Rogers Communications Inc. 3.7% 11/15/2049 +0.2%
  Siemens Financieringsmaatschappij NV 1.7% 9/15/2021 Reg S +0.5%
–   Boeing Co. 5.805% 5/1/2050 -1.4%
  Boeing Co. 5.15% 5/1/2030 -0.7%
  CVS Health Corp. 5.05% 3/25/2048 -0.7%
  Energy Transfer Operating, LP 5% 5/15/2050 -2.3%
  Boeing Co. 5.93% 5/1/2060 -0.9%
Boeing Co.   5.805% 5/1/2050
Boeing Co.   5.15% 5/1/2030
Amazon.com Inc.   2.5% 6/3/2050
Energy Transfer Operating, LP   5% 5/15/2050
CVS Health Corp.   5.05% 3/25/2048
Boeing Co.   5.93% 5/1/2060
Pfizer Inc.   2.7% 5/28/2050
Southwest Airlines Co.   5.125% 6/15/2027
Citigroup Inc.   2.572% 6/3/2031
Pfizer Inc.   1.7% 5/28/2030
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.14% 1.64% 7.36% 3.78% 2.01% 8.43%
Construction 0.06% 0.97% 3.72% -0.59% 1.68% 7.07%
Manufacturing 0.19% 0.76% 3.25% 0.53% 4.53% 10.96%
Transportion, Communication, Electric/Gas 0.34% 1.17% 3.73% 1.54% 5.42% 12.93%
Wholesale 0.33% 1.45% 4.15% 0.58% 3.70% 10.90%
Retail 0.30% 1.12% 3.65% 1.13% 5.51% 13.02%
Finance, Insurance, Real-Estate 0.18% 0.87% 2.84% 0.55% 3.68% 8.66%
Services 0.24% 0.75% 2.81% -0.59% 4.03% 10.16%
Public Administration 0.13% -0.02% 0.01% 0.69% 3.97% 5.37%
Energy 0.13% 1.72% 7.88% 5.22% 2.14% 8.76%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Florida Gas Transmission Co. (USD) 2.55% 7/1/2030 (06/10/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.763, Yielding 2.58%.

2. Enwave Energy Corp. (CAD) 3.34% 6/15/2050 (06/10/2020): 80000MM Secured Notes, Price at Issuance 100, Yielding 3.34%.

3. Pinnacle West Capital Corp. (USD) 1.3% 6/15/2025 (06/10/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.99, Yielding 1.3%.

4. ConnectOne Bancorp Inc. (USD) VAR% 6/15/2030 (06/10/2020): 75MM Subordinated Notes, Price at Issuance 100.

5. Toronto-Dominion Bank (USD) 1.15% 6/12/2025 (06/10/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.995, Yielding 1.15%.

6. Toronto-Dominion Bank (USD) 0.75% 6/12/2023 (06/10/2020): 1750MM Senior Unsecured Notes, Price at Issuance 99.926, Yielding .77%.

7. Ares Finance Co. LLC (USD) 3.25% 6/15/2030 144A (06/10/2020): 400MM Senior Unsecured Notes, Price at Issuance 99.771, Yielding 3.28%.

8. CrediCorp. LTD (USD) 2.75% 6/17/2025 144A (06/10/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.459, Yielding 2.87%.

9. Florida Gas Transmission Co. (USD) 2.55% 7/1/2030 144A (06/10/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.763, Yielding 2.58%.

10. Bank of Montreal (CAD) VAR% 6/17/2030 (06/10/2020): 1250MM Subordinated Notes, Price at Issuance 100.

Additional Commentary

NEW ISSUANCE WATCH: on 06/10/2020 participants welcome a $2750MM new corporate-bond offering by Toronto-Dominion Bank.
Top Widening Loans Top Narrowing Loans
Moneygram Intl. Inc. (USD) TLB L+600 06/30/2023
Dubois Chemicals Inc. (USD) TL L+850 10/08/2027
Lully Finance Sarl (EUR) TL E+375 10/31/2022
American Gaming Systems (USD) TLB L+350 02/15/2024
Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027
CB Richard Ellis Services Inc. (USD) TLA L+100 03/04/2024
Global TIP Finance BV (EUR) TL 11/21/2026
NCL Corp. LTD (USD) TLA L+150 01/02/2024
Ahlsell AB (EUR) TL E+825 03/01/2027
Koninklijke Ten Cate NV (EUR) TLB E+350 01/27/2023

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 06/10/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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