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North American Bond Research – June 29, 2020

Posted on June 29, 2020
HIGH YIELD BOND RESEARCH
June 29, 2020
Bond Markets

EVEN THOUGH COVID-19 CASES IN FLORIDA, TEXAS, AND ARIZONA KEEP RISING, AN UNEXPECTED HUGE POP IN REAL ESTATE SALES GAVE CONFIDENCE TO MARKET INVESTORS. THIS PUSHED MARKETS HIGHER. 10 Year Treasury notes were unchanged. S&P +1.47%, Dow +2.32%, NASDAQ +1.2%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 10.3 MILLION+ CASES AND 506000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 2.7 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
+   T-Mobile USA Inc. 3.875% 4/15/2030 144A +0.0%
  Pacific Gas & Electric Co. 3.95% 12/1/2047 +0.5%
  Dish DBS Corp. 6.75% 6/1/2021 (1) +0.0%
  Constellation Brands Inc. 4.25% 5/1/2023 +0.1%
  T-Mobile USA Inc. 3.75% 4/15/2027 144A +0.1%
–   Chesapeake Energy Corp. 11.5% 1/1/2025 Reg S -11.7%
  Ford Motor Credit Co. 5.125% 6/16/2025 -0.1%
  Tenet Healthcare Corp. 6.75% 6/15/2023 -2.3%
  Navient Corp. 5.875% 3/25/2021 -0.4%
  Chemours Co. LLC 7% 5/15/2025 -0.1%
T-Mobile USA Inc.   3.875% 4/15/2030 144A
Pacific Gas & Electric Co.   3.95% 12/1/2047
Chesapeake Energy Corp.   11.5% 1/1/2025 Reg S
Dish DBS Corp.   6.75% 6/1/2021 (1)
Constellation Brands Inc.   4.25% 5/1/2023
Ford Motor Credit Co.   5.125% 6/16/2025
T-Mobile USA Inc.   3.75% 4/15/2027 144A
Tenet Healthcare Corp.   6.75% 6/15/2023
Sprint Nextel Corp.   7.875% 9/15/2023
Jabil Circuit Inc.   5.625% 12/15/2020
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.02% -0.49% 1.36% 13.70% 1.05% 5.60%
Mining -0.83% -2.16% 9.84% 46.22% -16.25% -11.40%
Construction -0.12% -0.17% 3.52% 13.26% -0.07% 5.80%
Manufacturing -0.28% -0.89% 3.29% 16.24% -1.87% 3.75%
Transportion, Communication, Electric/Gas -0.23% -0.77% 1.60% 16.60% 0.83% 5.78%
Wholesale -0.24% -0.61% 3.56% 22.10% -1.02% 3.77%
Retail -0.23% -0.99% 7.80% 13.86% -4.61% 0.87%
Finance, Insurance, Real-Estate -0.14% -0.46% 4.33% 13.52% -2.39% 3.46%
Services -0.30% -1.05% 2.41% 14.98% -1.62% 4.41%
Public Administration -0.69% -0.78% 4.14% 22.75% 0.41% 6.15%
Energy -0.79% -2.13% 8.32% 49.88% -14.10% -9.48%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 06/29/2020)
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. Carnival Cruise Line: $2.76B equivalent U.S. and euro five-year term B (Baa3); $1.86B TL; ¬800 TL

4. Angus Chemical Co. : $500MM TL (B1/B/BB+): equivalent U.S. and euro

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

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

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

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

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

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

Additional Commentary

NEW ISSUANCE WATCH: No new issues.
Top Widening Loans Top Narrowing Loans
Deoleo SA (EUR) TLB1 E+350 06/12/2021
Unifrax Corp. (USD) TL2 L+850 12/14/2026
Worldwide Express (USD) TL L+400 02/03/2024
McClatchy Co. (USD) TLA 7.795% 07/15/2030
American Tire Distributors Inc. (USD) TL DIP PIK L+600 09/01/2023
American Renal Holdings Inc. (USD) TLB L+325 06/22/2024
Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027
Hurtigruten Group AS (EUR) TLC E+800 06/16/2023
Dun & Bradstreet Corp. (USD) TL L+400 02/08/2026
Intl. Car Wash Group (USD) TL2 L+750 10/03/2025

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 17 bp (basis points), as of 06/26/2020
  • Net negative capital flows into high-yield ETFs & mutual funds
INVESTMENT GRADE BOND RESEARCH
June 29, 2020
Bond Markets

EVEN THOUGH COVID-19 CASES IN FLORIDA, TEXAS, AND ARIZONA KEEP RISING, AN UNEXPECTED HUGE POP IN REAL ESTATE SALES GAVE CONFIDENCE TO MARKET INVESTORS. THIS PUSHED MARKETS HIGHER. 10 Year Treasury notes were unchanged. S&P +1.47%, Dow +2.32%, NASDAQ +1.2%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 10.3 MILLION+ CASES AND 506000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 2.7 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
+   Cigna Corp. 3.75% 7/15/2023 +0.3%
  Verizon Communications Inc. 4% 3/22/2050 +0.4%
  CVS Health Corp. 4.3% 3/25/2028 +0.4%
  Pfizer Inc. 2.7% 5/28/2050 +1.4%
  Oracle Corp. 3.85% 4/1/2060 +0.4%
–   Boeing Co. 5.15% 5/1/2030 -0.1%
  Kinder Morgan Inc. 4.3% 3/1/2028 -0.1%
  Energy Transfer Partners LP 5.875% 1/15/2024 -0.0%
  Amazon.com Inc. 2.5% 6/3/2050 -1.2%
  PayPal Hldg Inc. 1.35% 6/1/2023 -0.1%
Cigna Corp.   3.75% 7/15/2023
Verizon Communications Inc.   4% 3/22/2050
CVS Health Corp.   4.3% 3/25/2028
Boeing Co.   5.15% 5/1/2030
Pfizer Inc.   2.7% 5/28/2050
Oracle Corp.   3.85% 4/1/2060
Verizon Communications Inc.   4.522% 9/15/2048
JPMorgan Chase & Co.   2.522% 4/22/2031
Kinder Morgan Inc.   4.3% 3/1/2028
Energy Transfer Partners LP   5.875% 1/15/2024
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.07% -0.41% 3.33% 20.96% 1.88% 6.44%
Construction -0.07% -0.16% 3.16% 14.09% 2.32% 6.32%
Manufacturing 0.05% 0.04% 1.98% 9.91% 5.13% 9.83%
Transportion, Communication, Electric/Gas 0.07% -0.01% 2.46% 13.68% 5.98% 11.64%
Wholesale 0.04% -0.23% 3.11% 10.81% 3.88% 9.58%
Retail 0.10% 0.13% 2.22% 10.65% 6.09% 11.71%
Finance, Insurance, Real-Estate -0.01% 0.03% 2.20% 8.37% 4.17% 7.96%
Services 0.06% -0.04% 2.23% 9.01% 4.67% 9.21%
Public Administration -0.13% -0.10% 0.09% 1.00% 4.24% 5.06%
Energy -0.10% -0.46% 3.39% 22.00% 1.74% 6.59%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]

(None Current 06/29/2020)
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
Deoleo SA (EUR) TLB1 E+350 06/12/2021
Unifrax Corp. (USD) TL2 L+850 12/14/2026
Worldwide Express (USD) TL L+400 02/03/2024
McClatchy Co. (USD) TLA 7.795% 07/15/2030
American Tire Distributors Inc. (USD) TL DIP PIK L+600 09/01/2023
American Renal Holdings Inc. (USD) TLB L+325 06/22/2024
Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027
Hurtigruten Group AS (EUR) TLC E+800 06/16/2023
Dun & Bradstreet Corp. (USD) TL L+400 02/08/2026
Intl. Car Wash Group (USD) TL2 L+750 10/03/2025

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

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