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North American Bond Research – June 16, 2020

Posted on June 16, 2020
HIGH YIELD BOND RESEARCH
June 16, 2020
Bond Markets
MARKETS POP AS FED ROLES OUT CORP BOND PURCHASING PROGRAM, PROGRESS ON VACCINE IS MADE, AND RETAIL SALES REBOUND 14% IN THE MONTH OF MAY. 10 Year Treasury notes were up 5.4 basis points. S&P +1.9%, Dow +2.04%, NASDAQ +1.75%.

CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 8.2 MILLION+ CASES AND 445000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 2.2 MILLION+ CASES AND 120000+ DEATHS.  Among high-grade bonds showing topmost price gains at appreciable volumes traded, Hertz Corp (The) (USD) 7% 1/15/2028made 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 +0.4%
Pacific Gas & Electric Co. 6.05% 3/1/2034 +10.1%
Ford Motor Co. 9% 4/22/2025 +2.7%
T-Mobile USA Inc. 3.5% 4/15/2025 144A +1.1%
Pacific Gas & Electric Co. 3.3% 12/1/2027 +1.6%
–   Pacific Gas & Electric Co. 2.95% 3/1/2026 -0.5%
Charter Communications Operating LLC 4.8% 3/1/2050 -0.0%
Hertz Corp. 5.5% 10/15/2024 Reg S -3.4%
Ford Motor Credit Co. 4.389% 1/8/2026 -0.1%
Alberta Energy Co. Limited 7.375% 11/1/2031 -2.8%
T-Mobile USA Inc.   3.875% 4/15/2030 144A
Pacific Gas & Electric Co.   6.05% 3/1/2034
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
Ford Motor Co.   8.5% 4/21/2023
Pacific Gas & Electric Co.   4.3% 3/15/2045
Pacific Gas & Electric Co.   2.95% 3/1/2026
Ford Motor Co.   9.625% 4/22/2030
Delta Airlines   7.375% 1/15/2026
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.30% -1.19% 2.90% 4.99% 1.07% 7.06%
Mining -0.34% -2.41% 20.72% 11.10% -17.16% -9.49%
Construction -0.17% -0.84% 5.07% 1.43% -0.90% 5.77%
Manufacturing -0.19% -1.53% 6.08% 3.11% -1.84% 4.87%
Transportion, Communication, Electric/Gas -0.11% -1.11% 4.74% 6.36% 0.62% 6.93%
Wholesale -0.07% -0.48% 6.81% 6.41% -1.49% 3.99%
Retail -0.22% -1.42% 8.59% 1.26% -3.91% 2.14%
Finance, Insurance, Real-Estate -0.15% -0.77% 6.63% 1.48% -3.13% 3.30%
Services -0.25% -1.64% 6.18% 3.86% -1.85% 4.96%
Public Administration -0.39% -0.89% 5.74% 8.14% -0.29% 6.69%
Energy -0.23% -1.97% 19.05% 14.28% -14.01% -7.94%
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%.

2. Illuminate Buyer LLC Illuminate Hldg IV Inc. (USD) 9% 7/1/2028 144A (06/16/2020): 460MM Senior Unsecured Notes, Price at Issuance 100, Yielding 9%.

3. Dana Inc. (USD) 5.62% 6/15/2028 (06/16/2020): 400MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.62%.

 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: Dana Inc. issued $400MM in notes.
Top Widening Loans Top Narrowing Loans
American Tire Distributors Inc. (USD) TL DIP PIK L+600 09/01/2023
Perstorp Hldg AB (USD) TLB L+475 04/05/2026
Akorn Inc. (USD) TL L+1250 04/16/2021
Worldwide Express (USD) TL L+400 02/03/2024
Ahlsell AB (EUR) TL E+825 03/01/2027		 Distributed Power Inc. (USD) TLB L+325 11/02/2025
Quest Software US Holdings Inc (USD) TL L+825 05/17/2026
Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027
Green Energy Partners (USD) TLB1 L+550 11/13/2021
Sandvine Corp. (USD) TL L+450 11/02/2025

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 14 bp (basis points), as of 06/16/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
June 16, 2020
Bond Markets
MARKETS POP AS FED ROLES OUT CORP BOND PURCHASING PROGRAM, PROGRESS ON VACCINE IS MADE, AND RETAIL SALES REBOUND 14% IN THE MONTH OF MAY. 10 Year Treasury notes were up 5.4 basis points. S&P +1.9%, Dow +2.04%, NASDAQ +1.75%.

CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 8.2 MILLION+ CASES AND 445000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 2.2 MILLION+ CASES AND 120000+ 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 +1.7%
  AT&T Inc. 3.65% 6/1/2051 +1.1%
  Boeing Co. 5.805% 5/1/2050 +1.4%
  General Electric Co. 4.35% 5/1/2050 +1.3%
  Dupont de Nemours Inc. 2.169% 5/1/2023 +0.1%
–   Amazon.com Inc. 2.5% 6/3/2050 -0.3%
  Stryker Corp. 1.95% 6/15/2030 -0.1%
  Amazon.com Inc. 1.5% 6/3/2030 -0.7%
  Nike Inc. 3.375% 3/27/2050 -0.6%
  Nike Inc. 3.25% 3/27/2040 -1.3%
Boeing Co.   5.15% 5/1/2030
AT&T Inc.   3.65% 6/1/2051
Boeing Co.   5.805% 5/1/2050
General Electric Co.   4.35% 5/1/2050
Amazon.com Inc.   2.5% 6/3/2050
Dupont de Nemours Inc.   2.169% 5/1/2023
Boeing Co.   4.875% 5/1/2025
Hewlett-Packard Co.   2.2% 6/17/2025
General Motors Co.   6.125% 10/1/2025
Boeing Co.   5.93% 5/1/2060
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.26% -0.29% 6.02% 8.75% 1.28% 7.38%
Construction 0.08% 0.52% 4.04% 4.05% 1.73% 6.66%
Manufacturing -0.08% 0.28% 2.73% 4.22% 4.45% 10.58%
Transportion, Communication, Electric/Gas -0.05% 0.56% 3.32% 6.35% 5.24% 12.46%
Wholesale -0.12% 0.53% 3.71% 3.22% 3.35% 9.88%
Retail -0.20% 0.35% 3.20% 4.73% 5.20% 12.33%
Finance, Insurance, Real-Estate -0.05% 0.35% 2.50% 3.22% 3.56% 8.14%
Services -0.04% 0.46% 2.82% 3.04% 3.86% 9.54%
Public Administration -0.04% 0.30% 0.09% 1.22% 4.29% 5.47%
Energy -0.27% -0.35% 6.29% 10.40% 1.16% 7.45%
 
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.

3. Vancouver Airport Fuel Facilities Corp. (CAD) 2.168% 6/23/2025 (06/15/2020): 330MM Secured Notes, Price at Issuance 100, Yielding 2.17%.

4. Bridgewater Bancshares Inc. (USD) VAR% 7/1/2030 (06/16/2020): 50MM Subordinated Notes, Price at Issuance 100.

5. Westinghouse Air Brake Technologies Corp. (USD) 3.2% 6/15/2025 (06/16/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.892, Yielding 3.22%.

6. BorgWarner Inc. (USD) 2.65% 7/1/2027 (06/16/2020): 1100MM Senior Unsecured Notes, Price at Issuance 99.719, Yielding 2.69%.

7. Principal Life Global Fund II (USD) 1.25% 6/23/2025 144A (06/16/2020): 500MM Secured Notes, Price at Issuance 99.918, Yielding 1.27%.

8. Guardian Life Global Funding (USD) 1.1% 6/23/2025 144A (06/16/2020): 400MM Secured Notes, Price at Issuance 99.908, Yielding 1.12%.

9. Welltower Inc. (USD) 2.75% 1/15/2031 (06/16/2020): 600MM Senior Unsecured Notes, Price at Issuance 99.491, Yielding 2.81%.

10. Ford Motor Credit Co. (USD) 5.125% 6/16/2025 (06/16/2020): 1750MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.13%.
Additional Commentary
NEW ISSUANCE WATCH: on 06/15/2020 participants welcome a $1750MM new corporate-bond offering by Ford Motor Credit.
Top Widening Loans Top Narrowing Loans
American Tire Distributors Inc. (USD) TL DIP PIK L+600 09/01/2023
Perstorp Hldg AB (USD) TLB L+475 04/05/2026
Akorn Inc. (USD) TL L+1250 04/16/2021
Worldwide Express (USD) TL L+400 02/03/2024
Ahlsell AB (EUR) TL E+825 03/01/2027		 Distributed Power Inc. (USD) TLB L+325 11/02/2025
Quest Software US Holdings Inc (USD) TL L+825 05/17/2026
Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027
Green Energy Partners (USD) TLB1 L+550 11/13/2021
Sandvine Corp. (USD) TL L+450 11/02/2025

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 14 bp (basis points), as of 06/16/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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