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North American Bond Research – June 2, 2020

Posted on June 2, 2020
HIGH YIELD BOND RESEARCH
June 2, 2020
Bond Markets

MARKETS, DURING CORONAVIRUS AND RACE RIOTS, FEEL THERE WILL BE A “V” SHAPE RECOVERY IN THE ECONOMY. OIL IS SIMILARLY SOARING UP TO $36.75 A BARREL. 10 Year Treasury notes were up 1.8 basis points. S&P +0.82%, Dow +1.05%, NASDAQ +0.59%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 6.4 MILLION+ CASES AND 380000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 1.88 MILLION+ CASES AND 108000+ 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. 8.5% 4/21/2023 +1.5%
  Petrobras Global Finance BV 7.375% 1/17/2027 +0.5%
  EQT Corp. 6.125% 2/1/2025 +0.7%
  Latam Finance Limited 6.875% 4/11/2024 Reg S +5.1%
  Ford Motor Co. 9% 4/22/2025 +1.3%
–   Sabine Pass Liquefaction LLC 5.625% 3/1/2025 -0.1%
  SLM Corp. (USD) 5.5% 1/25/2023 -1.1%
  Ford Motor Credit Co. 3.664% 9/8/2024 -0.3%
  HCA Inc. 5.375% 2/1/2025 -0.1%
  Sprint Nextel Corp. 6% 11/15/2022 -0.1%
Ford Motor Co.   8.5% 4/21/2023
Sabine Pass Liquefaction LLC   5.625% 3/1/2025
Petrobras Global Finance BV   7.375% 1/17/2027
EQT Corp.   6.125% 2/1/2025
Latam Finance Limited   6.875% 4/11/2024 Reg S
Ford Motor Co.   9% 4/22/2025
Sprint Capital Corp.   6.875% 11/15/2028
EQT Midstream Partners LP   4.75% 7/15/2023
Petrobras Global Finance BV   8.75% 5/23/2026
Pacific Gas & Electric Co.   6.05% 3/1/2034
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.02% 0.84% 2.51% -1.15% 0.15% 7.67%
Mining 0.18% 2.62% 22.24% -16.69% -21.48% -13.37%
Construction 0.25% 2.09% 5.09% -3.75% -2.15% 6.48%
Manufacturing 0.15% 1.71% 4.37% -3.76% -3.13% 5.11%
Transportion, Communication, Electric/Gas 0.15% 1.24% 4.20% -0.82% -0.03% 7.27%
Wholesale 0.14% 1.86% 5.82% -4.40% -4.66% 2.28%
Retail 0.17% 2.03% 4.74% -5.60% -5.18% 2.75%
Finance, Insurance, Real-Estate 0.20% 1.84% 3.30% -5.37% -4.94% 2.53%
Services 0.22% 2.08% 4.99% -3.35% -3.27% 5.30%
Public Administration 0.12% 2.04% 3.34% -3.60% -2.24% 5.82%
Energy 0.19% 2.93% 22.30% -13.30% -17.64% -10.74%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Picasso Finance Sub Inc. (USD) 6.125% 6/15/2025 144A (06/01/2020): 650MM Secured Notes, Price at Issuance 100, Yielding 6.13%.

2. Picasso Finance Sub Inc. (USD) 6.125% 6/15/2025 Reg S (06/01/2020): 650MM Secured Notes, Price at Issuance 100, Yielding 6.13%.

3. Axalta Coating Systems Dutch Holding B BV (USD) 4.75% 6/15/2027 144A (06/01/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.75%.

4. Virgin Media Finance PLC (USD) 5% 7/15/2030 144A (06/01/2020): 675MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5%.

5. Virgin Media Finance PLC (USD) 5% 7/15/2030 Reg S (06/01/2020): 675MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5%.

6. Axalta Coating Systems Dutch Holding B BV (USD) 4.75% 6/15/2027 Reg S (06/01/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.75%.

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. Xplorenet Communictations Inc.: $1.425B credit facilities (B3/B-): $150MM revolver; $1.275B first-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. Championx: $537MM TL

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

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

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

Additional Commentary

NEW ISSUANCE WATCH: Picasso Finance Sub issued $650 MM in notes.
Top Widening Loans Top Narrowing Loans
Diamond Resorts Intl. (USD) TLB L+375 09/02/2023
Fleetpride Corp. (USD) TL L+800 12/19/2026
Compass IV LTD (EUR) TLB E+450 05/09/2025
American Greetings Corp. (USD) TLB L+450 04/06/2024
Aretec Group Inc (USD) TL L+425 10/01/2025
ProFrac Services LLC (USD) TLB L+575 09/06/2023
Alterra Mountain (USD) TLB L+450 05/13/2026
Flint Group (USD) TLB2 L+300 09/07/2021
Delek (USD) TLB L+550 03/30/2025
ConvergeOne LLC (USD) TL L+500 01/04/2026

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 06/02/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
June 2, 2020
Bond Markets

MARKETS, DURING CORONAVIRUS AND RACE RIOTS, FEEL THERE WILL BE A “V” SHAPE RECOVERY IN THE ECONOMY. OIL IS SIMILARLY SOARING UP TO $36.75 A BARREL. 10 Year Treasury notes were up 1.8 basis points. S&P +0.82%, Dow +1.05%, NASDAQ +0.59%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 6.4 MILLION+ CASES AND 380000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 1.88 MILLION+ CASES AND 108000+ 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 +1.3%
  Southwest Airlines Co. 1.25% 5/1/2025 +1.3%
  Boeing Co. 5.93% 5/1/2060 +1.2%
  Marriott Intl Inc. 4.625% 6/15/2030 +1.3%
  Stryker Corp. 1.95% 6/15/2030 +0.0%
–   Walt Disney Co. 3.6% 1/13/2051 -0.7%
  AT&T Inc. 3.65% 6/1/2051 -0.6%
  Anthem Inc. 2.25% 5/15/2030 -0.2%
  PayPal Hldg Inc. 3.25% 6/1/2050 -0.5%
  AT&T Inc. 2.75% 6/1/2031 -1.3%
Boeing Co.   5.805% 5/1/2050
Southwest Airlines Co.   1.25% 5/1/2025
Boeing Co.   5.93% 5/1/2060
Walt Disney Co.   3.6% 1/13/2051
Marriott Intl Inc.   4.625% 6/15/2030
Stryker Corp.   1.95% 6/15/2030
Citigroup Inc.   2.572% 6/3/2031
Wells Fargo & Co.   VAR% 6/2/2028
AT&T Inc.   3.65% 6/1/2051
Anthem Inc.   2.25% 5/15/2030
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.19% 1.55% 5.49% -2.83% -0.31% 6.70%
Construction -0.03% 1.25% 2.64% -2.93% 0.14% 5.32%
Manufacturing 0.05% 0.56% 1.57% 0.19% 3.56% 10.31%
Transportion, Communication, Electric/Gas 0.06% 0.74% 1.39% -0.13% 4.10% 11.68%
Wholesale 0.24% 1.05% 1.99% -0.94% 1.66% 8.86%
Retail 0.07% 0.64% 1.45% 0.68% 4.24% 11.68%
Finance, Insurance, Real-Estate 0.08% 0.57% 1.29% -0.28% 2.56% 7.80%
Services 0.08% 0.64% 1.11% -0.32% 3.18% 9.29%
Public Administration 0.03% 0.09% 0.27% 2.14% 4.25% 5.69%
Energy 0.16% 1.70% 5.93% -2.44% -0.17% 6.52%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Met Life Global Funding Inc. (USD) 0.9% 6/8/2023 Reg S (06/01/2020): 1000MM Secured Notes, Price at Issuance 99.855, Yielding .95%.

2. Ally Financial Inc. (USD) 3.05% 6/5/2023 (06/01/2020): 800MM Senior Unsecured Notes, Price at Issuance 99.299, Yielding 3.3%.

3. American Tower Corp. (USD) 3.1% 6/15/2050 (06/01/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.014, Yielding 3.15%.

4. Amazon.com Inc. (USD) 1.5% 6/3/2030 (06/01/2020): 2000MM Senior Unsecured Notes, Price at Issuance 99.889, Yielding 1.51%.

5. American Tower Corp. (USD) 2.1% 6/15/2030 (06/01/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.425, Yielding 2.16%.

6. Amazon.com Inc. (USD) 2.5% 6/3/2050 (06/01/2020): 2500MM Senior Unsecured Notes, Price at Issuance 98.977, Yielding 2.55%.

7. Amazon.com Inc. (USD) 2.7% 6/3/2060 (06/01/2020): 200MM Senior Unsecured Notes, Price at Issuance 98.816, Yielding 2.75%.

8. American Tower Corp. (USD) 1.3% 9/15/2025 (06/01/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.719, Yielding 1.36%.

9. Amazon.com Inc. (USD) 1.2% 6/3/2027 (06/01/2020): 1250MM Senior Unsecured Notes, Price at Issuance 99.967, Yielding 1.2%.

10. Amazon.com Inc. (USD) 0.4% 6/3/2023 (06/01/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.86, Yielding .45%.

Additional Commentary

NEW ISSUANCE WATCH: on 06/02/2020 participants welcome a $7000MM new corporate-bond offering by Amazon.com Inc.
Top Widening Loans Top Narrowing Loans
Diamond Resorts Intl. (USD) TLB L+375 09/02/2023
Fleetpride Corp. (USD) TL L+800 12/19/2026
Compass IV LTD (EUR) TLB E+450 05/09/2025
American Greetings Corp. (USD) TLB L+450 04/06/2024
Aretec Group Inc (USD) TL L+425 10/01/2025
ProFrac Services LLC (USD) TLB L+575 09/06/2023
Alterra Mountain (USD) TLB L+450 05/13/2026
Flint Group (USD) TLB2 L+300 09/07/2021
Delek (USD) TLB L+550 03/30/2025
ConvergeOne LLC (USD) TL L+500 01/04/2026

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 06/02/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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