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North American Bond Research – June 23, 2020

Posted on June 23, 2020
HIGH YIELD BOND RESEARCH
June 23, 2020
Bond Markets
MARKETS WERE UP AS WHITE HOUSE TRADE ADVISOR PETER NAVARRO STATE THAT THE CHINESE DEAL IS ON AND WAS NEVER OFF. US/CHINESE TENSIONS SEEMED TO CALM MARKETS DOWN. 10 Year Treasury notes were UP .5 basis points. S&P +0.43%, Dow +0.5%, NASDAQ +0.74%.

CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 9.3 MILLION+ CASES AND 478000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 2.4 MILLION+ CASES AND 123000+ 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 +0.1%
  T-Mobile USA Inc. 3.75% 4/15/2027 144A +0.0%
  Petrobras Global Finance BV 6.85% 6/5/2115 +2.0%
  Delta Airlines 7.375% 1/15/2026 +0.2%
  Pacific Gas & Electric Co. 3.95% 12/1/2047 +0.5%
–   T-Mobile USA Inc. 3.5% 4/15/2025 144A -0.0%
  Ally Financial Inc. 3.875% 5/21/2024 -1.5%
  Spirit Aerosystems Inc. 4.6% 6/15/2028 -5.5%
  Oasis Petroleum Inc. 6.875% 3/15/2022 (1) -12.1%
  SRC Energy Inc. 6.25% 12/1/2025 -0.3%
T-Mobile USA Inc.   3.875% 4/15/2030 144A
T-Mobile USA Inc.   3.75% 4/15/2027 144A
T-Mobile USA Inc.   3.5% 4/15/2025 144A
Petrobras Global Finance BV   6.85% 6/5/2115
Delta Airlines   7.375% 1/15/2026
Pacific Gas & Electric Co.   3.95% 12/1/2047
Occidental Petroleum Corp.   2.7% 8/15/2022
Petrobras Global Finance BV   7.375% 1/17/2027
SM Energy Co.   6.75% 9/15/2026
Ally Financial Inc.   3.875% 5/21/2024
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.13% 0.62% 2.09% 16.71% 1.45% 6.05%
Mining -0.15% 1.29% 17.87% 47.24% -16.98% -10.24%
Construction 0.01% 0.84% 4.17% 11.67% -0.23% 5.56%
Manufacturing -0.07% 0.95% 5.02% 19.84% -1.31% 4.45%
Transportion, Communication, Electric/Gas -0.04% 0.66% 3.02% 23.28% 1.59% 6.28%
Wholesale -0.15% 0.25% 4.52% 23.82% -0.87% 3.86%
Retail -0.10% 0.53% 9.16% 15.60% -3.77% 1.53%
Finance, Insurance, Real-Estate -0.05% 0.86% 5.56% 15.50% -2.07% 3.58%
Services -0.11% 0.74% 4.82% 18.34% -1.64% 4.41%
Public Administration -0.08% 1.25% 5.66% 19.22% 1.15% 7.44%
Energy -0.12% 1.29% 15.63% 51.84% -13.75% -8.28%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. CommScope Inc. (USD) 7.125% 7/1/2028 144A (06/22/2020): 700MM Senior Unsecured Notes, Price at Issuance 100, Yielding 7.13%.

2. Fortune Star Bvi Ltd (USD) 6.85% 7/2/2024 (06/22/2020): 600MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.85%.

3. CommScope Inc. (USD) 7.125% 7/1/2028 Reg S (06/22/2020): 700MM Senior Unsecured Notes, Price at Issuance 100, Yielding 7.13%.

4. Gibson Energy Inc. (USD) 2.85% 7/14/2027 (06/22/2020): 325MM Senior Unsecured Notes, Price at Issuance 99.975, Yielding 2.85%.

5. Gibson Energy Inc. (CAD) 2.45% 7/14/2025 (06/22/2020): 325MM Senior Unsecured Notes, Price at Issuance 99.804, Yielding 2.49%.

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

2. Blucora Inc.: $175MM add-on senior secured TL (BB)

3. Cardtronics PLC: $500MM covenant-lite TL (Ba2/BB+)

4. Gardner Denver Inc.: $400MM covenant-lite TLB (Ba2/BB+)

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

6. Neenah Inc.: $200MM covenant-lite TLB (Ba3/BBB-)

7. PQ Corp.: $450MM cocentant-lite TLB

8. RSA: $1.425B credit facilities: $75MM revolver; $1B TL; $350MM 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: CommScope Inc issued $700MM in notes.
Top Widening Loans Top Narrowing Loans
Affidea BV (EUR) TLB E+375 12/04/2026
Azelis SA (EUR) TLB3 E+350 11/07/2025
Emerald Performance Materials (USD) TL L+350 08/01/2021
ADB Safegate (EUR) TLB E+350 10/02/2024
Novacap SA (EUR) TLB1 E+350 07/22/2023		 Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027
Dun & Bradstreet Corp. (USD) TL L+400 02/08/2026
Distributed Power Inc. (USD) TLB L+325 11/02/2025
SMG (USD) Bridge TL L+250 01/23/2025
Duravant LLC (USD) TL2 L+725 07/25/2025

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 15 bp (basis points), as of 06/23/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

HIGH YIELD BOND RESEARCH
June 23, 2020
Bond Markets
MARKETS WERE MIXED TO LOWER AS CORONA VIRUS FLARES UP IN MULTIPLE HOT SPOTS. US MARKETS FINISHED HIGHER AS APPLE PARTS WAYS WITH INTEL. 10 Year Treasury notes were UP .7 basis points. S&P +0.65%, Dow +0.59%, NASDAQ +1.11%.

CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 9.2 MILLION+ CASES AND 475000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 2.4 MILLION+ CASES AND 123000+ 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
+   Occidental Petroleum Corp. 2.7% 8/15/2022 +1.4%
  Petrobras Global Finance BV 7.375% 1/17/2027 +0.2%
  Delta Airlines 7.375% 1/15/2026 +0.5%
  Occidental Petroleum Corp. 6.45% 9/15/2036 +1.9%
  Weekley Homes LLC 6.625% 8/15/2025 +0.7%
–   Petrobras Global Finance BV 6.85% 6/5/2115 -0.3%
  Ally Financial Inc. 3.875% 5/21/2024 -1.6%
  T-Mobile USA Inc. 3.5% 4/15/2025 144A -0.1%
  T-Mobile USA Inc. 3.875% 4/15/2030 144A -0.2%
  T-Mobile USA Inc. 3.75% 4/15/2027 144A -0.2%
Petrobras Global Finance BV   6.85% 6/5/2115
Ally Financial Inc.   3.875% 5/21/2024
Occidental Petroleum Corp.   2.7% 8/15/2022
T-Mobile USA Inc.   3.5% 4/15/2025 144A
T-Mobile USA Inc.   3.875% 4/15/2030 144A
Petrobras Global Finance BV   7.375% 1/17/2027
Delta Airlines   7.375% 1/15/2026
T-Mobile USA Inc.   3.75% 4/15/2027 144A
Occidental Petroleum Corp.   6.45% 9/15/2036
Weekley Homes LLC   6.625% 8/15/2025
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.13% 0.62% 2.09% 16.71% 1.45% 6.05%
Mining -0.15% 1.29% 17.87% 47.24% -16.98% -10.24%
Construction 0.01% 0.84% 4.17% 11.67% -0.23% 5.56%
Manufacturing -0.07% 0.95% 5.02% 19.84% -1.31% 4.45%
Transportion, Communication, Electric/Gas -0.04% 0.66% 3.02% 23.28% 1.59% 6.28%
Wholesale -0.15% 0.25% 4.52% 23.82% -0.87% 3.86%
Retail -0.10% 0.53% 9.16% 15.60% -3.77% 1.53%
Finance, Insurance, Real-Estate -0.05% 0.86% 5.56% 15.50% -2.07% 3.58%
Services -0.11% 0.74% 4.82% 18.34% -1.64% 4.41%
Public Administration -0.08% 1.25% 5.66% 19.22% 1.15% 7.44%
Energy -0.12% 1.29% 15.63% 51.84% -13.75% -8.28%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. CommScope Inc. (USD) 7.125% 7/1/2028 144A (06/22/2020): 700MM Senior Unsecured Notes, Price at Issuance 100, Yielding 7.13%.

2. Fortune Star Bvi Ltd (USD) 6.85% 7/2/2024 (06/22/2020): 600MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.85%.

3. CommScope Inc. (USD) 7.125% 7/1/2028 Reg S (06/22/2020): 700MM Senior Unsecured Notes, Price at Issuance 100, Yielding 7.13%.

4. Gibson Energy Inc. (USD) 2.85% 7/14/2027 (06/22/2020): 325MM Senior Unsecured Notes, Price at Issuance 99.975, Yielding 2.85%.

5. Gibson Energy Inc. (CAD) 2.45% 7/14/2025 (06/22/2020): 325MM Senior Unsecured Notes, Price at Issuance 99.804, Yielding 2.49%.

 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. Neenah Inc.: $200MM covenant-lite TLB (Ba3/BBB-)

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. Blucora Inc.: $175MM add-on senior secured TL (BB)

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

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

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

10. Whole Earth Brands (ACT II GLOBAL ACQUISTION CORP.):: $235 MM credit facilities: $50MM reolver; $185MM term A
Additional Commentary
NEW ISSUANCE WATCH: CommScope Inc issued $700MM in notes.
Top Widening Loans Top Narrowing Loans
Affidea BV (EUR) TLB E+375 12/04/2026
Azelis SA (EUR) TLB3 E+350 11/07/2025
Emerald Performance Materials (USD) TL L+350 08/01/2021
ADB Safegate (EUR) TLB E+350 10/02/2024
Novacap SA (EUR) TLB1 E+350 07/22/2023		 Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027
Dun & Bradstreet Corp. (USD) TL L+400 02/08/2026
Distributed Power Inc. (USD) TLB L+325 11/02/2025
SMG (USD) Bridge TL L+250 01/23/2025
Duravant LLC (USD) TL2 L+725 07/25/2025

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 06/22/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

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