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North American Bond Research – June 15, 2020

Posted on June 15, 2020
INVESTMENT GRADE BOND RESEARCH
June 15, 2020
Bond Markets

MARKETS POP AS FED PLEDGES TO BUY INDIVIDUAL CORPORATE BONDS IN THE SECONDARY MARKET. THEY PLAN TO SETUP A SYSTEM THAT WOULD ALLOW THE FEDERAL GOVERNMENT TO BUY UP TO $750 BILLION IN CORPORATE BONDS. 10 Year Treasury notes were up .3 basis points. S&P +0.83%, Dow +0.62%, NASDAQ +1.43%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 8.1 MILLION+ CASES AND 438000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 2.2 MILLION+ CASES AND 119000+ 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. 5.15% 5/1/2030 +0.8%
  Boeing Co. 5.805% 5/1/2050 +1.2%
  Goldman Sachs Group Inc. 3.5% 4/1/2025 +0.1%
  Delta Airlines 7.375% 1/15/2026 +0.3%
  Oracle Corp. 2.5% 4/1/2025 +0.3%
–   CVS Health Corp. 2.8% 7/20/2020 -0.0%
  Morgan Stanley VAR% 4/1/2031 -0.6%
  Simon Property Group Inc. 2% 9/13/2024 -0.0%
  Royal Bank of Canada 1.15% 6/10/2025 -0.1%
  Costco Wholesale Corp. 1.6% 4/20/2030 -0.7%
Boeing Co.   5.15% 5/1/2030
Boeing Co.   5.805% 5/1/2050
Goldman Sachs Group Inc.   3.5% 4/1/2025
Delta Airlines   7.375% 1/15/2026
Oracle Corp.   2.5% 4/1/2025
CVS Health Corp.   2.8% 7/20/2020
Ralph Lauren Corp.   2.95% 6/15/2030
Morgan Stanley   VAR% 4/1/2031
CVS Health Corp.   3.7% 3/9/2023
Amazon.com Inc.   2.7% 6/3/2060
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.15% 0.53% 7.01% 8.11% 1.32% 7.75%
Construction -0.10% 0.79% 3.86% 2.00% 1.71% 6.66%
Manufacturing -0.04% 0.60% 3.29% 3.08% 4.38% 10.55%
Transportion, Communication, Electric/Gas -0.12% 1.03% 4.01% 5.22% 5.25% 12.62%
Wholesale 0.04% 1.07% 4.50% 2.38% 3.52% 10.68%
Retail -0.14% 0.94% 3.74% 4.15% 5.50% 12.75%
Finance, Insurance, Real-Estate -0.03% 0.67% 2.92% 2.40% 3.60% 8.51%
Services -0.04% 0.77% 3.19% 2.03% 4.16% 10.27%
Public Administration 0.05% 0.30% 0.20% 1.07% 4.32% 5.54%
Energy -0.18% 0.57% 7.35% 9.27% 1.46% 7.97%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. CASTLE PEAK POWER FINANCE COMPANY LTD (USD) 2.2% 6/22/2030 (06/15/2020): 350MM Senior Unsecured Notes.

2. Rogers Communications Inc. (USD) FLT% 3/22/2022 (06/15/2020): 750MM Senior Unsecured Notes, Price at Issuance 100.

Additional Commentary

NEW ISSUANCE WATCH: on 06/15/2020 participants welcome a $750MM new corporate-bond offering by Rogers Communications.
Top Widening Loans Top Narrowing Loans
NCL Corp. LTD (USD) TLA L+150 01/02/2024
BVI Medical Inc. (EUR) TLB E+350 02/28/2026
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
Averys SA (EUR) TLB E+825 09/25/2026
Sandvine Corp. (USD) TL L+450 11/02/2025
Learning Care Group Inc. (USD) TLB L+325 03/13/2025
Livingston Intl. Inc. (USD) TL L+575 04/25/2026
Fortress Merger Sub Inc. (USD) TL2 L+850 10/21/2024
CH Guenther & Son Inc. (USD) TLB L+275 03/23/2025
Averys SA (EUR) TLB E+375 09/25/2025

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 06/15/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

 

HIGH YIELD BOND RESEARCH
June 15, 2020
Bond Markets

MARKETS POP AS FED PLEDGES TO BUY INDIVIDUAL CORPORATE BONDS IN THE SECONDARY MARKET. THEY PLAN TO SETUP A SYSTEM THAT WOULD ALLOW THE FEDERAL GOVERNMENT TO BUY UP TO $750 BILLION IN CORPORATE BONDS. 10 Year Treasury notes were up .3 basis points. S&P +0.83%, Dow +0.62%, NASDAQ +1.43%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 8.1 MILLION+ CASES AND 438000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 2.2 MILLION+ CASES AND 119000+ 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
+   T-Mobile USA Inc. 3.875% 4/15/2030 144A +1.1%
  Delta Airlines 7.375% 1/15/2026 +0.3%
  T-Mobile USA Inc. 3.75% 4/15/2027 144A +1.0%
  Ford Motor Co. 8.5% 4/21/2023 +1.6%
  T-Mobile USA Inc. 3.5% 4/15/2025 144A +0.4%
–   BED Bath & Beyond Inc. 5.165% 8/1/2044 -4.6%
  Hertz Corp. 6.25% 10/15/2022 -14.2%
  Hertz Corp. 5.5% 10/15/2024 Reg S -10.2%
  Service Properties Trust 7.5% 9/15/2025 -1.6%
  MDC Hldg Inc. 6% 1/15/2043 -1.5%
T-Mobile USA Inc.   3.875% 4/15/2030 144A
Delta Airlines   7.375% 1/15/2026
T-Mobile USA Inc.   3.75% 4/15/2027 144A
Ford Motor Co.   8.5% 4/21/2023
T-Mobile USA Inc.   3.5% 4/15/2025 144A
BED Bath & Beyond Inc.   5.165% 8/1/2044
Ford Motor Co.   9% 4/22/2025
Petrobras Global Finance BV   6.85% 6/5/2115
Hertz Corp.   6.25% 10/15/2022
Sprint Nextel Corp.   7.875% 9/15/2023
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.22% -0.47% 2.91% 4.73% 1.18% 8.17%
Mining -0.70% -0.02% 20.27% 5.67% -19.16% -11.26%
Construction 0.05% -0.39% 5.14% 0.35% -0.72% 6.30%
Manufacturing -0.06% -0.74% 5.01% 2.31% -1.36% 5.35%
Transportion, Communication, Electric/Gas -0.04% -0.66% 4.19% 5.84% 0.87% 7.24%
Wholesale -0.03% 0.02% 5.49% 4.55% -2.34% 2.78%
Retail -0.07% -0.44% 8.05% 0.31% -3.79% 2.26%
Finance, Insurance, Real-Estate -0.06% -0.17% 5.68% 0.52% -2.42% 4.52%
Services -0.01% -1.01% 5.89% 3.10% -1.44% 5.47%
Public Administration 0.22% 0.43% 6.04% 6.74% 0.37% 7.45%
Energy -0.55% -0.01% 18.19% 9.15% -15.81% -8.84%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. VAP FNDG Master Trust II (USD) 9% 7/1/2024 (06/15/2020): 152MM Secured Notes, Price at Issuance 100, Yielding 9%. 1. Martin Midstream Partners LP: $400MM senior secured notes

2. Lummus Technology Inc. : $460MM senior notes (Caa1/B-)

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

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

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

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

7. 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

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

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

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

Additional Commentary

NEW ISSUANCE WATCH: WR GRACE & Co. issued $750MM in notes.
Top Widening Loans Top Narrowing Loans
NCL Corp. LTD (USD) TLA L+150 01/02/2024
BVI Medical Inc. (EUR) TLB E+350 02/28/2026
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
Averys SA (EUR) TLB E+825 09/25/2026
Sandvine Corp. (USD) TL L+450 11/02/2025
Learning Care Group Inc. (USD) TLB L+325 03/13/2025
Livingston Intl. Inc. (USD) TL L+575 04/25/2026
Fortress Merger Sub Inc. (USD) TL2 L+850 10/21/2024
CH Guenther & Son Inc. (USD) TLB L+275 03/23/2025
Averys SA (EUR) TLB E+375 09/25/2025

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 06/15/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

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