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North American Bond Research – June 3, 2020

Posted on June 3, 2020
HIGH YIELD BOND RESEARCH
June 3, 2020
Bond Markets

MARKETS ONCE AGAIN SHRUG OFF CORONAVIRUS, RACIAL STRIFE AND ECONOMIC DISTRESS TO ASSERT THAT A “V” SHAPE RECOVERY IS GOING TO TO HAPPEN. REOPENING THE ECONOMY IS THE CENTRAL FOCUS OF INVESTORS. 10 Year Treasury notes were up 8.1 basis points. S&P +1.36%, Dow +2.05%, NASDAQ +0.78%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 6.5 MILLION+ CASES AND 386000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 1.9 MILLION+ CASES AND 110000+ 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
+   Deutsche Bank AG 4.5% 4/1/2025 +3.8%
  Radian Group Inc. 6.625% 3/15/2025 +0.8%
  Occidental Petroleum Corp. 2.9% 8/15/2024 +1.4%
  iHeartCommunications Inc. 8.375% 5/1/2027 +1.6%
  Petrobras Global Finance BV 6.85% 6/5/2115 +3.9%
–   United Rentals Inc. 5.5% 7/15/2025 -0.3%
  Sprint Corp. 7.625% 2/15/2025 -0.0%
  Constellation Brands Inc. 4.75% 11/15/2024 -0.7%
  Qwest Communications Intl Inc. 6.75% 12/1/2021 -0.7%
  Tenet Healthcare Corp. 6.75% 6/15/2023 -0.4%
Deutsche Bank AG   4.5% 4/1/2025
Radian Group Inc.   6.625% 3/15/2025
Occidental Petroleum Corp.   2.9% 8/15/2024
iHeartCommunications Inc.   8.375% 5/1/2027
Petrobras Global Finance BV   6.85% 6/5/2115
Aircastle LTD   5% 4/1/2023
Ford Motor Co.   9% 4/22/2025
Occidental Petroleum Corp.   2.7% 2/15/2023
Goodyear Tire & Rubber Co.   9.5% 5/31/2025
Aercap Hldg NV   5.875% 10/10/2079
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.05% 0.63% 2.55% -0.98% 0.24% 7.70%
Mining 0.47% 1.75% 19.45% -17.23% -22.16% -12.78%
Construction 0.18% 1.86% 5.13% -3.65% -2.08% 6.36%
Manufacturing 0.26% 1.51% 5.18% -3.04% -2.40% 5.56%
Transportion, Communication, Electric/Gas 0.20% 1.02% 4.50% -0.50% 0.43% 7.63%
Wholesale 0.18% 1.53% 6.98% -2.85% -3.07% 4.02%
Retail 0.22% 1.72% 5.59% -5.60% -5.56% 2.30%
Finance, Insurance, Real-Estate 0.31% 1.71% 3.58% -5.00% -4.54% 3.23%
Services 0.31% 1.78% 5.35% -2.54% -2.51% 5.79%
Public Administration 0.23% 1.60% 3.55% -3.49% -2.02% 6.04%
Energy 0.42% 2.03% 20.38% -13.82% -18.38% -10.70%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. MGM Growth Properties Operating Partnership LP (USD) 4.625% 6/15/2025 Reg S (06/02/2020): 800MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.63%.

2. Endeavor Energy Resources LP (USD) 6.625% 7/15/2025 Reg S (06/02/2020): 600MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.63%.

3. MGM Growth Properties Operating Partnership LP (USD) 4.625% 6/15/2025 144A (06/02/2020): 800MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.63%.

4. Endeavor Energy Resources LP (USD) 6.625% 7/15/2025 144A (06/02/2020): 600MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.63%.

5. Tenet Healthcare Corp. (USD) 4.625% 6/15/2028 Reg S (06/02/2020): 600MM First Lien Notes, Price at Issuance 100, Yielding 4.63%.

6. Tenet Healthcare Corp. (USD) 4.625% 6/15/2028 144A (06/02/2020): 600MM First Lien Notes, Price at Issuance 100, Yielding 4.63%.

7. CSC Holdings LLC (USD) 4.125% 12/1/2030 144A (06/02/2020): 1100MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.13%.

8. CSC Holdings LLC (USD) 4.625% 12/1/2030 144A (06/02/2020): 625MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.63%.

9. Credit Suisse Group AG (USD) VAR% 6/5/2026 144A (06/02/2020): 1500MM Senior Unsecured Notes, Price at Issuance 100.

10. CSC Holdings LLC (USD) 4.125% 12/1/2030 Reg S (06/02/2020): 1100MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.13%.

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: Tenet Healthcare Corp issued $600 MM in notes.
Top Widening Loans Top Narrowing Loans
NCL Corp. LTD (USD) TLA L+150 01/02/2024
Logoplaste (EUR) TLB E+400 10/31/2023
ProFrac Services LLC (USD) TLB L+575 09/06/2023
SSH Group Hldg Inc. (USD) TL2 L+825 07/30/2026
Ahlsell AB (EUR) TL E+825 03/01/2027
Surgery Partners LLC (USD) TL L+800 08/31/2024
Albertsons LLC (USD) TL L+275 11/17/2025
Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027
Allsup’s (USD) TLB L+625 11/18/2024
Amynta (USD) TLB L+400 02/28/2025

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 19 bp (basis points), as of 06/03/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
June 3, 2020
Bond Markets

MARKETS ONCE AGAIN SHRUG OFF CORONAVIRUS, RACIAL STRIFE AND ECONOMIC DISTRESS TO ASSERT THAT A “V” SHAPE RECOVERY IS GOING TO TO HAPPEN. REOPENING THE ECONOMY IS THE CENTRAL FOCUS OF INVESTORS. 10 Year Treasury notes were up 8.1 basis points. S&P +1.36%, Dow +2.05%, NASDAQ +0.78%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 6.5 MILLION+ CASES AND 386000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 1.9 MILLION+ CASES AND 110000+ 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
+   AT&T Inc. 3.65% 6/1/2051 +1.1%
  Boeing Co. 5.93% 5/1/2060 +0.5%
  Citigroup Inc. 2.572% 6/3/2031 +0.7%
  Boeing Co. 5.805% 5/1/2050 +0.6%
  Amazon.com Inc. 2.7% 6/3/2060 +0.8%
–   Oracle Corp. 3.85% 4/1/2060 -0.5%
  Amazon.com Inc. 1.5% 6/3/2030 -0.3%
  Apple Inc. 1.65% 5/11/2030 -0.6%
  CVS Health Corp. 5.05% 3/25/2048 -0.2%
  Nike Inc. 3.375% 3/27/2050 -0.7%
AT&T Inc.   3.65% 6/1/2051
Boeing Co.   5.93% 5/1/2060
Citigroup Inc.   2.572% 6/3/2031
Boeing Co.   5.805% 5/1/2050
Amazon.com Inc.   2.7% 6/3/2060
GE Capital Intl. Funding Co.   4.418% 11/15/2035
Oracle Corp.   3.6% 4/1/2050
Amazon.com Inc.   2.5% 6/3/2050
Southwest Airlines Co.   1.25% 5/1/2025
Oracle Corp.   3.85% 4/1/2060
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.18% 1.45% 5.60% -2.38% -0.05% 6.87%
Construction 0.10% 1.08% 2.68% -3.51% -0.62% 4.19%
Manufacturing 0.08% 0.56% 1.61% 0.24% 3.85% 10.69%
Transportion, Communication, Electric/Gas 0.06% 0.72% 1.46% -0.11% 4.24% 11.65%
Wholesale -0.02% 0.88% 2.08% -1.24% 1.43% 8.75%
Retail 0.12% 0.70% 1.56% 0.86% 4.52% 12.07%
Finance, Insurance, Real-Estate 0.11% 0.62% 1.39% -0.34% 2.66% 7.83%
Services 0.06% 0.59% 1.19% -0.51% 3.31% 9.31%
Public Administration -0.02% 0.07% 0.22% 1.89% 4.22% 5.77%
Energy 0.19% 1.56% 5.99% -1.94% 0.14% 6.76%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Carnegie Institution WSH (USD) 3.224% 7/1/2049 (06/02/2020): 100MM Unsecured Notes, Price at Issuance 100, Yielding 3.22%.

2. Centerpoint Energy Houston Electric (USD) 2.9% 7/1/2050 (06/02/2020): 300MM Secured Notes, Price at Issuance 99.799, Yielding 2.91%.

3. Truist Financial Corp. (USD) 1.95% 6/5/2030 (06/02/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.711, Yielding 1.98%.

4. Nordea Bank AB (USD) 1% 6/9/2023 144A (06/02/2020): 1000MM Senior Preferred Security, Price at Issuance 99.897, Yielding 1.03%.

5. Infor Inc. (USD) 1.75% 7/15/2025 144A (06/02/2020): 650MM Senior Unsecured Notes, Price at Issuance 99.882, Yielding 1.77%.

6. Infor Inc. (USD) 1.45% 7/15/2023 Reg S (06/02/2020): 350MM Senior Unsecured Notes, Price at Issuance 99.969, Yielding 1.46%.

7. Nordea Bank AB (USD) 1% 6/9/2023 Reg S (06/02/2020): 1000MM Senior Preferred Security, Price at Issuance 99.897, Yielding 1.03%.

8. Infor Inc. (USD) 1.75% 7/15/2025 Reg S (06/02/2020): 650MM Senior Unsecured Notes, Price at Issuance 99.882, Yielding 1.77%.

9. SVB Financial Group (USD) 3.125% 6/5/2030 (06/02/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.923, Yielding 3.13%.

10. Affiliated Managers Group Inc. (USD) 3.3% 6/15/2030 (06/02/2020): 350MM Senior Unsecured Notes, Price at Issuance 99.957, Yielding 3.3%.

Additional Commentary

NEW ISSUANCE WATCH: on 06/03/2020 participants welcome a $1000MM new corporate-bond offering by Infor Inc.
Top Widening Loans Top Narrowing Loans
NCL Corp. LTD (USD) TLA L+150 01/02/2024
Logoplaste (EUR) TLB E+400 10/31/2023
ProFrac Services LLC (USD) TLB L+575 09/06/2023
SSH Group Hldg Inc. (USD) TL2 L+825 07/30/2026
Ahlsell AB (EUR) TL E+825 03/01/2027
Surgery Partners LLC (USD) TL L+800 08/31/2024
Albertsons LLC (USD) TL L+275 11/17/2025
Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027
Allsup’s (USD) TLB L+625 11/18/2024
Amynta (USD) TLB L+400 02/28/2025

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 21 bp (basis points), as of 06/02/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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