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North American Bond Research – June 26, 2020

Posted on June 26, 2020
HIGH YIELD BOND RESEARCH
June 26, 2020
Bond Markets

CONSUMER SENTIMENT FELL AS WELL AS FLORIDA AND TEXAS REVERSED TRACK AND CLOSED BARS AND RESTAURANTS. MARKETS TANKED DUE TO FALLING CONSUMER SENTIMENT AND SURGING CORONA VIRUS CLOSINGS. 10 Year Treasury notes were down 3.8 basis points. S&P -2.64%, Dow -2.42%, NASDAQ -2.59%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 9.9 MILLION+ CASES AND 500000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 2.5 MILLION+ CASES AND 130000+ 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
+   Western Midstream Operating, LP 5.25% 2/1/2050 +1.2%
  Pacific Gas & Electric Co. 4.6% 6/15/2043 +0.4%
  CBL & Associates LP 5.95% 12/15/2026 +3.0%
  Citigroup Inc. 6.125% PERP +0.2%
  Ally Financial Inc. 3.875% 5/21/2024 +0.5%
–   Delta Airlines 7.375% 1/15/2026 -0.7%
  T-Mobile USA Inc. 3.875% 4/15/2030 144A -0.2%
  Pacific Gas & Electric Co. 4% 12/1/2046 -0.5%
  PG&E Corp. 5.25% 7/1/2030 -0.3%
  Occidental Petroleum Corp. 4.4% 8/15/2049 -1.4%
Pacific Gas & Electric Co.   3.3% 12/1/2027
Delta Airlines   7.375% 1/15/2026
T-Mobile USA Inc.   3.875% 4/15/2030 144A
Pacific Gas & Electric Co.   4% 12/1/2046
PG&E Corp.   5.25% 7/1/2030
Occidental Petroleum Corp.   4.4% 8/15/2049
HCA Inc.   3.5% 9/1/2030
Occidental Petroleum Corp.   3.5% 8/15/2029
EQT Corp.   6.125% 2/1/2025
Tenet Healthcare Corp.   8.125% 4/1/2022
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.10% -0.35% 1.78% 16.26% 1.17% 5.49%
Mining -0.73% -1.50% 15.52% 48.03% -18.37% -11.64%
Construction -0.10% -0.03% 4.29% 13.78% 0.11% 5.89%
Manufacturing -0.22% -0.58% 4.26% 18.54% -1.81% 4.10%
Transportion, Communication, Electric/Gas -0.22% -0.59% 2.25% 20.10% 1.13% 5.82%
Wholesale -0.23% -0.43% 4.54% 25.56% -1.08% 3.61%
Retail -0.20% -0.89% 8.93% 17.06% -4.37% 1.00%
Finance, Insurance, Real-Estate -0.17% -0.30% 4.88% 15.63% -2.01% 3.78%
Services -0.27% -0.79% 3.52% 18.24% -1.16% 4.54%
Public Administration -0.08% 0.22% 5.77% 26.09% 1.30% 7.23%
Energy -0.56% -1.24% 11.73% 53.10% -14.30% -9.89%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Meredith Corp (USD) 6.5% 7/1/2025 144A (06/25/2020): 300MM Secured Notes, Price at Issuance 100, Yielding 6.5%.

2. Meredith Corp (USD) 6.5% 7/1/2025 Reg S (06/25/2020): 300MM Secured Notes, Price at Issuance 100, Yielding 6.5%.

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

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

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

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

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

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

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

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

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

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

Additional Commentary

NEW ISSUANCE WATCH: Meredith Corp issued $300MM in notes.
Top Widening Loans Top Narrowing Loans
Hurtigruten Group AS (EUR) TLC E+800 06/16/2023
New LightSquared LLC (USD) TL PIK L+875 12/07/2020
Sandvine Corp. (USD) TL L+450 11/02/2025
Concordia International (USD) TL EXIT L+550 09/06/2024
Koninklijke Ten Cate NV (EUR) TLB E+350 01/27/2023
Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027
Learning Care Group Inc. (USD) TLB L+325 03/13/2025
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
Distributed Power Inc. (USD) TLB L+325 11/02/2025
American Bath (USD) TL L+425 09/30/2023

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 17 bp (basis points), as of 06/26/2020
  • Net negative capital flows into high-yield ETFs & mutual funds
INVESTMENT GRADE BOND RESEARCH
June 26, 2020
Bond Markets

CONSUMER SENTIMENT FELL AS WELL AS FLORIDA AND TEXAS REVERSED TRACK AND CLOSED BARS AND RESTAURANTS. MARKETS TANKED DUE TO FALLING CONSUMER SENTIMENT AND SURGING CORONA VIRUS CLOSINGS. 10 Year Treasury notes were down 3.8 basis points. S&P -2.64%, Dow -2.42%, NASDAQ -2.59%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 9.9 MILLION+ CASES AND 500000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 2.5 MILLION+ CASES AND 130000+ 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
+   Bank of America Corp. VAR% 6/19/2041 +0.4%
  AT&T Inc. 2.3% 6/1/2027 +0.3%
  Altria Group Inc. 4.8% 2/14/2029 +0.2%
  Prologis 3% 4/15/2050 +0.4%
  Royal Bank of Canada 1.15% 6/10/2025 +0.1%
–   Pacific Gas & Electric Co. 3.5% 8/1/2050 -0.2%
  Pacific Gas & Electric Co. 2.5% 2/1/2031 -0.0%
  AT&T Inc. 3.65% 6/1/2051 -1.3%
  General Electric Co. FLT% PERP (1) -0.9%
  Citigroup Inc. FLT% 6/1/2024 -0.4%
Pacific Gas & Electric Co.   3.5% 8/1/2050
Bank of America Corp.   VAR% 6/19/2041
AT&T Inc.   2.3% 6/1/2027
Pacific Gas & Electric Co.   2.5% 2/1/2031
Altria Group Inc.   4.8% 2/14/2029
Prologis   3% 4/15/2050
Royal Bank of Canada   1.15% 6/10/2025
Anheuser-Busch Inbev Worldwide Inc.   5.55% 1/23/2049
AT&T Inc.   3.65% 6/1/2051
General Electric Co.   FLT% PERP (1)
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.20% -0.23% 3.88% 22.64% 1.38% 6.21%
Construction 0.00% -0.17% 3.63% 16.94% 2.86% 6.40%
Manufacturing -0.02% 0.04% 1.98% 11.42% 5.07% 9.53%
Transportion, Communication, Electric/Gas -0.04% 0.01% 2.51% 15.82% 5.93% 11.28%
Wholesale -0.06% -0.15% 3.25% 11.82% 3.90% 9.09%
Retail -0.04% 0.06% 2.15% 11.99% 6.07% 11.25%
Finance, Insurance, Real-Estate -0.03% 0.05% 2.27% 9.57% 4.17% 7.79%
Services -0.10% -0.06% 2.34% 10.71% 4.60% 8.89%
Public Administration -0.01% 0.07% 0.14% 1.12% 4.31% 5.01%
Energy -0.19% -0.27% 3.92% 24.69% 1.76% 6.41%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Intuit Inc. (USD) 0.95% 7/15/2025 (06/25/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.921, Yielding .97%.

2. Intuit Inc. (USD) 0.65% 7/15/2023 (06/25/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.976, Yielding .66%.

3. Intuit Inc. (USD) 1.35% 7/15/2027 (06/25/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.906, Yielding 1.36%.

4. Intuit Inc. (USD) 1.65% 7/15/2030 (06/25/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.76, Yielding 1.68%.

5. Matterhorn RE LTD (USD) FLT% 12/24/2023 (06/25/2020): 65MM Unsecured Notes, Price at Issuance 100.

6. Mileage Plus Holdings LLC / Mileage Plus Intellectual Property Assets Ltd (USD) 6.5% 6/20/2027 144A (06/25/2020): 3800MM First Lien Notes, Price at Issuance 98.75, Yielding 6.73%.

7. Banner Corp (USD) VAR% 6/30/2030 (06/25/2020): 100MM Subordinated Notes, Price at Issuance 100.

8. Matterhorn RE LTD (USD) 0% 12/7/2023 (06/25/2020): 175MM Unsecured Notes, Price at Issuance 86.25, Yielding 4.33%.

Additional Commentary

NEW ISSUANCE WATCH: on 06/24/2020 participants welcome a $1500MM new corporate-bond offering by Intuit Inc.
Top Widening Loans Top Narrowing Loans
Hurtigruten Group AS (EUR) TLC E+800 06/16/2023
New LightSquared LLC (USD) TL PIK L+875 12/07/2020
Sandvine Corp. (USD) TL L+450 11/02/2025
Concordia International (USD) TL EXIT L+550 09/06/2024
Koninklijke Ten Cate NV (EUR) TLB E+350 01/27/2023
Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027
Learning Care Group Inc. (USD) TLB L+325 03/13/2025
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
Distributed Power Inc. (USD) TLB L+325 11/02/2025
American Bath (USD) TL L+425 09/30/2023

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 17 bp (basis points), as of 06/26/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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