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North American Bond Research – June 18, 2020

Posted on June 18, 2020
HIGH YIELD BOND RESEARCH
June 18, 2020
Bond Markets

1.5 MILLION MORE AMERICANS LOSE THEIR JOBS. CORONAVIRUS CASES KEEP ON SPIKING IN A DOZEN STATES PUTTING PRESSURE ON ECONOMIES AS TO HOW FAST THEY SHOULD OPEN UP. 10 Year Treasury notes were down 3.9 basis points. S&P +0.06%, Dow -0.15%, NASDAQ +0.33%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 8.5 MILLION+ CASES AND 455000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 2.25 MILLION+ CASES AND 121000+ 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. 4.6% 6/15/2043 +1.1%
  Pacific Gas & Electric Co. 3.3% 3/15/2027 +0.3%
  General Motors Co. 6.25% 10/2/2043 +0.3%
  Equinix Inc. 5.375% 5/15/2027 +0.0%
  Sprint Spectrum LP 7.25% 9/15/2021 +0.6%
–   Pacific Gas & Electric Co. 3.5% 8/1/2050 -0.3%
  Pacific Gas & Electric Co. 2.5% 2/1/2031 -0.8%
  T-Mobile USA Inc. 3.875% 4/15/2030 144A -0.2%
  Pacific Gas & Electric Co. 1.75% 6/16/2022 -0.0%
  Pacific Gas & Electric Co. 3.95% 12/1/2047 -0.9%
  Delta Airlines 7.375% 1/15/2026 -1.8%
Pacific Gas & Electric Co.   3.5% 8/1/2050
Pacific Gas & Electric Co.   2.5% 2/1/2031
T-Mobile USA Inc.   3.875% 4/15/2030 144A
Pacific Gas & Electric Co.   1.75% 6/16/2022
Pacific Gas & Electric Co.   3.95% 12/1/2047
Pacific Gas & Electric Co.   3.75% 8/15/2042
Pacific Gas & Electric Co.   4.6% 6/15/2043
T-Mobile USA Inc.   3.75% 4/15/2027 144A
Delta Airlines   7.375% 1/15/2026
Pacific Gas & Electric Co.   3.3% 3/15/2027
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.29% -0.33% 4.02% 10.77% 1.57% 7.90%
Mining 0.39% -0.95% 21.90% 20.96% -15.16% -8.00%
Construction 0.21% 0.02% 5.99% 4.87% 0.25% 6.99%
Manufacturing 0.18% -0.27% 7.66% 7.82% -1.26% 5.38%
Transportion, Communication, Electric/Gas 0.04% -0.02% 5.44% 11.66% 1.53% 7.55%
Wholesale 0.05% -0.10% 7.07% 12.27% -0.57% 5.17%
Retail 0.14% -0.21% 10.73% 5.70% -3.49% 2.43%
Finance, Insurance, Real-Estate 0.20% 0.07% 7.92% 5.76% -2.13% 4.01%
Services 0.17% -0.31% 7.24% 8.55% -0.85% 5.80%
Public Administration 0.52% 0.53% 7.26% 13.48% 1.16% 7.88%
Energy 0.39% -0.57% 20.08% 25.12% -12.15% -6.31%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. DPL Inc. (USD) 4.125% 7/1/2025 Reg S (06/17/2020): 415MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.13%.

2. DPL Inc. (USD) 4.125% 7/1/2025 144A (06/17/2020): 415MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.13%.

3. DPL Inc. (USD) 4.125% 7/1/2025 (06/17/2020): 415MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.13%.

4. Scientific Games Intl. Inc. (USD) 8.625% 7/1/2025 144A (06/17/2020): 550MM Senior Unsecured Notes, Price at Issuance 100, Yielding 8.63%.

5. Scientific Games Intl. Inc. (USD) 8.625% 7/1/2025 Reg S (06/17/2020): 550MM Senior Unsecured Notes, Price at Issuance 100, Yielding 8.63%.

6. Horizon Bancorp (USD) VAR% 7/1/2030 (06/17/2020): 60MM Subordinated Notes, Price at Issuance 100.

7. DCP Midstream Operating LP (USD) 5.625% 7/15/2027 (06/17/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.63%.

8. Iron Mountain Inc. (USD) 5% 7/15/2028 144A (06/17/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5%.

9. Iron Mountain Inc. (USD) 5.25% 7/15/2030 144A (06/17/2020): 1300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.25%.

10. Iron Mountain Inc. (USD) 5.625% 7/15/2032 144A (06/17/2020): 600MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.63%.

1. Martin Midstream Partners LP: $400MM senior secured notes

2. Martin Midstream Partners LP: $400MM senior secured notes

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

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

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

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

9. 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

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

Additional Commentary

NEW ISSUANCE WATCH: DPL Inc. issued $415MM in notes.
Top Widening Loans Top Narrowing Loans
Vistra Group LTD (USD) TL2 L+725 10/26/2023
EnQuest PLC (USD) RCB L+475 10/01/2021
EG Group (USD) TLB L+400 02/06/2025
American Tire Distributors Inc. (USD) TL DIP PIK L+600 09/01/2023
Albea Beauty Holdings SA (USD) TLB L+300 04/12/2024
Affidea BV (EUR) TLB E+375 12/04/2026
PortAventura World (EUR) TLB E+350 06/14/2024
Fortress Merger Sub Inc. (USD) TL2 L+850 10/21/2024
Welbilt Corp. (USD) TL L+250 10/24/2025
SMG (USD) Bridge TL L+250 01/23/2025

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 06/18/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
June 18, 2020
Bond Markets

1.5 MILLION MORE AMERICANS LOSE THEIR JOBS. CORONAVIRUS CASES KEEP ON SPIKING IN A DOZEN STATES PUTTING PRESSURE ON ECONOMIES AS TO HOW FAST THEY SHOULD OPEN UP. 10 Year Treasury notes were down 3.9 basis points. S&P +0.06%, Dow -0.15%, NASDAQ +0.33%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 8.5 MILLION+ CASES AND 455000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 2.25 MILLION+ CASES AND 121000+ 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. 2.7% 6/3/2060 +0.5%
  Boeing Co. 5.805% 5/1/2050 +0.4%
  CVS Health Corp. 5.05% 3/25/2048 +0.4%
  BP Capital Markets PLC 3% 2/24/2050 +0.8%
  General Motors Co. 6.125% 10/1/2025 +0.9%
–   Pacific Gas & Electric Co. 3.5% 8/1/2050 -0.3%
  Pacific Gas & Electric Co. 3.3% 8/1/2040 -0.1%
  Biogen Inc. 2.25% 5/1/2030 -2.0%
  General Electric Co. 4.35% 5/1/2050 -0.2%
  Boeing Co. 5.15% 5/1/2030 -1.7%
Pacific Gas & Electric Co.   3.5% 8/1/2050
Pacific Gas & Electric Co.   3.3% 8/1/2040
Biogen Inc.   2.25% 5/1/2030
General Electric Co.   4.35% 5/1/2050
Boeing Co.   5.15% 5/1/2030
Amazon.com Inc.   0.8% 6/3/2025
Amazon.com Inc.   2.7% 6/3/2060
Boeing Co.   5.805% 5/1/2050
CVS Health Corp.   5.05% 3/25/2048
Pacific Gas & Electric Co.   2.1% 8/1/2027
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.28% 0.10% 7.22% 12.30% 1.61% 8.06%
Construction 0.21% 0.44% 4.45% 6.19% 1.84% 6.75%
Manufacturing 0.12% 0.30% 3.18% 6.46% 4.88% 10.68%
Transportion, Communication, Electric/Gas 0.18% 0.24% 3.90% 9.72% 5.66% 12.74%
Wholesale 0.18% 0.64% 4.83% 5.82% 4.12% 11.20%
Retail 0.17% 0.13% 3.67% 7.09% 5.63% 12.48%
Finance, Insurance, Real-Estate 0.11% 0.33% 2.83% 5.22% 4.00% 8.44%
Services 0.12% 0.45% 3.36% 5.60% 4.37% 9.82%
Public Administration 0.01% 0.09% 0.01% 1.13% 4.23% 5.44%
Energy 0.27% 0.09% 7.38% 13.71% 1.85% 8.06%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Idaho Power Corp. (USD) 1.9% 7/15/2030 (06/17/2020): 80MM Secured Notes, Price at Issuance 99.59, Yielding 1.94%.

2. Marshfield Clinic Health System Inc. (USD) 2.703% 2/15/2030 (06/17/2020): 148MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.7%.

3. Air Lease Corp. (USD) 3.375% 7/1/2025 (06/17/2020): 850MM Senior Unsecured Notes, Price at Issuance 98.975, Yielding 3.6%.

4. Schlumberger Investment (USD) 2.65% 6/26/2030 (06/17/2020): 900MM Senior Unsecured Notes, Price at Issuance 99.608, Yielding 2.69%.

5. GLP Capital LP (USD) 4% 1/15/2031 (06/17/2020): 500MM Senior Unsecured Notes, Price at Issuance 98.827, Yielding 4.14%.

6. General Motors Financial Co. Inc. (USD) 2.75% 6/20/2025 (06/17/2020): 1250MM Senior Unsecured Notes, Price at Issuance 99.843, Yielding 2.78%.

7. General Motors Financial Co. Inc. (USD) 3.6% 6/21/2030 (06/17/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.709, Yielding 3.63%.

8. Amdocs LTD (USD) 2.538% 6/15/2030 (06/17/2020): 650MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.54%.

9. Pacific Life Global Fdg MTN (USD) 1.2% 6/24/2025 144A (06/17/2020): 600MM Secured Notes, Price at Issuance 99.778, Yielding 1.25%.

10. Pacific Life Global Fdg MTN (USD) 1.2% 6/24/2025 Reg S (06/17/2020): 600MM Secured Notes, Price at Issuance 99.778, Yielding 1.25%.

Additional Commentary

NEW ISSUANCE WATCH: on 06/17/2020 participants welcome an $80MM new corporate-bond offering by Idaho Power Corp.
Top Widening Loans Top Narrowing Loans
Vistra Group LTD (USD) TL2 L+725 10/26/2023
EnQuest PLC (USD) RCB L+475 10/01/2021
EG Group (USD) TLB L+400 02/06/2025
American Tire Distributors Inc. (USD) TL DIP PIK L+600 09/01/2023
Affidea BV (EUR) TLB E+375 12/04/2026
PortAventura World (EUR) TLB E+350 06/14/2024
Fortress Merger Sub Inc. (USD) TL2 L+850 10/21/2024
Welbilt Corp. (USD) TL L+250 10/24/2025
SMG (USD) Bridge TL L+250 01/23/2025

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 06/18/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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