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North American Bond Research – June 30, 2020

Posted on June 30, 2020
HIGH YIELD BOND RESEARCH
June 30, 2020
Bond Markets

THE CORONA VIRUS SPREAD IN MULTIPLE STATES AT THE SLOWEST RATE IN OVER A WEEK. EMERGING TREATMENTS ARE HELPING SPEED UP RECOVERY AND HELP LESSEN THE NEED FOR RESPIRATORS. 10 Year Treasury notes were up 1.7 bps. S&P +1.54%, Dow +0.85%, NASDAQ +1.87%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 10.6 MILLION+ CASES AND 512000+ 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 +0.2%
  Delta Airlines 7.375% 1/15/2026 +0.5%
  Pacific Gas & Electric Co. 3.75% 2/15/2024 +1.4%
  PG&E Corp. 5% 7/1/2028 +0.5%
  Ford Motor Co. 8.5% 4/21/2023 +0.6%
–   Chesapeake Energy Corp. 7% 10/1/2024 -31.2%
  Occidental Petroleum Corp. 8.875% 7/15/2030 -0.1%
  Pacific Gas & Electric Co. 2.95% 3/1/2026 -0.7%
  Meredith Corp. 6.875% 2/1/2026 -1.3%
  PG&E Corp. 5.25% 7/1/2030 -0.0%
T-Mobile USA Inc.   3.875% 4/15/2030 144A
Chesapeake Energy Corp.   7% 10/1/2024
Delta Airlines   7.375% 1/15/2026
Pacific Gas & Electric Co.   3.75% 2/15/2024
PG&E Corp.   5% 7/1/2028
Occidental Petroleum Corp.   8.875% 7/15/2030
Ford Motor Co.   8.5% 4/21/2023
Pacific Gas & Electric Co.   2.95% 3/1/2026
Western Digital Corp.   4.75% 2/15/2026
Meredith Corp.   6.875% 2/1/2026
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.13% -0.46% 0.73% 12.44% 0.90% 5.18%
Mining -0.70% -3.28% 7.81% 41.50% -18.43% -11.94%
Construction 0.01% -0.17% 1.95% 12.01% -0.26% 5.50%
Manufacturing -0.13% -0.95% 2.00% 13.13% -1.89% 3.63%
Transportion, Communication, Electric/Gas -0.09% -0.82% 0.91% 14.26% 0.86% 5.58%
Wholesale -0.27% -0.74% 2.29% 23.38% -1.59% 3.10%
Retail -0.18% -1.10% 2.21% 12.26% -4.61% 0.65%
Finance, Insurance, Real-Estate -0.18% -0.67% 3.33% 12.08% -2.91% 2.64%
Services -0.31% -1.41% 0.83% 11.99% -2.37% 4.00%
Public Administration 0.32% 0.12% 3.78% 21.78% 1.27% 6.80%
Energy -0.72% -3.09% 6.01% 45.75% -15.66% -10.06%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Enviva Partners LP (USD) 6.5% 1/15/2026 (06/29/2020): 150MM Senior Unsecured Notes, Price at Issuance 103.75, Yielding 5.7%.

2. Garda World Security Corp. (USD) 4.625% 2/15/2027 Reg S (06/29/2020): 120MM First Lien Notes, Price at Issuance 98, Yielding 4.98%.

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

2. Carnival Cruise Line: $2.76B equivalent U.S. and euro five-year term B (Baa3); $1.86B TL; ¬800 TL

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

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

5. Ultimate Software Group: $3.545B Term Loans: $2.945B TLB (B1/B); $600MM TL (Caa1/CCC)

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

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

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

Additional Commentary

NEW ISSUANCE WATCH: Enviva Partners LP issued $150MM in notes.
Top Widening Loans Top Narrowing Loans
Superior Industries Intl. Inc. (USD) TLB L+400 05/23/2024
Hurtigruten Group AS (EUR) TLC E+800 06/16/2023
Syncsort Inc. (USD) TLB L+600 08/16/2024
Automate Intermediate Hldg II Sarl (EUR) TLB E+350 07/22/2026
Distributed Power Inc. (USD) TLB L+325 11/02/2025
PortAventura World (EUR) TLB E+350 06/14/2024
Moneygram Intl. Inc. (USD) TLB L+600 06/30/2023
American Renal Holdings Inc. (USD) TLB L+325 06/22/2024
Philadelphia Energy Solutions (USD) TLA L+625 12/31/2022

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 06/30/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
June 30, 2020
Bond Markets

THE CORONA VIRUS SPREAD IN MULTIPLE STATES AT THE SLOWEST RATE IN OVER A WEEK. EMERGING TREATMENTS ARE HELPING SPEED UP RECOVERY AND HELP LESSEN THE NEED FOR RESPIRATORS. 10 Year Treasury notes were up 1.7 bps. S&P +1.54%, Dow +0.85%, NASDAQ +1.87%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 10.6 MILLION+ CASES AND 512000+ 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
+   Boeing Co. 5.15% 5/1/2030 +0.0%
  General Electric Co. 4.35% 5/1/2050 +0.1%
  Citigroup Inc. 2.572% 6/3/2031 +0.6%
  Bank of America Corp. VAR% 6/19/2041 +0.3%
  Amazon.com Inc. 2.7% 6/3/2060 +0.2%
–   Amazon.com Inc. 1.5% 6/3/2030 -0.2%
  Pacific Gas & Electric Co. 2.5% 2/1/2031 -0.0%
  Pacific Gas & Electric Co. 3.5% 8/1/2050 -0.3%
  General Motors Financial Co. Inc. 2.75% 6/20/2025 -0.7%
  General Electric Co. 4.25% 5/1/2040 -0.3%
Boeing Co.   5.15% 5/1/2030
General Electric Co.   4.35% 5/1/2050
Citigroup Inc.   2.572% 6/3/2031
Amazon.com Inc.   1.5% 6/3/2030
Bank of America Corp.   VAR% 6/19/2041
Amazon.com Inc.   2.7% 6/3/2060
Pacific Gas & Electric Co.   2.5% 2/1/2031
Pacific Gas & Electric Co.   3.5% 8/1/2050
AerCap Ireland Capital LTD   6.5% 7/15/2025
Fifth Third Bank Cincinnati OH   2.25% 6/14/2021
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.04% -0.40% 2.33% 19.76% 1.79% 6.10%
Construction 0.17% 0.06% 2.31% 12.82% 2.53% 6.25%
Manufacturing 0.11% 0.04% 1.72% 8.88% 5.25% 9.52%
Transportion, Communication, Electric/Gas 0.11% 0.00% 2.05% 11.87% 6.12% 11.17%
Wholesale 0.06% -0.34% 2.52% 9.67% 4.14% 9.51%
Retail 0.14% 0.10% 1.82% 9.23% 6.36% 11.41%
Finance, Insurance, Real-Estate 0.11% 0.07% 1.95% 7.78% 4.34% 7.90%
Services 0.16% 0.03% 2.00% 7.90% 4.89% 9.00%
Public Administration -0.01% -0.09% -0.04% 0.73% 4.17% 4.95%
Energy -0.03% -0.56% 2.22% 20.71% 1.63% 6.01%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. AIG Global Funding (USD) 0.8% 7/7/2023 144A (06/29/2020): 500MM Secured Notes, Price at Issuance 99.923, Yielding .83%.

2. AIG Global Funding (USD) 0.8% 7/7/2023 Reg S (06/29/2020): 500MM Secured Notes, Price at Issuance 99.923, Yielding .83%.

3. AEP Texas Inc. (USD) 2.1% 7/1/2030 (06/29/2020): 600MM Senior Unsecured Notes, Price at Issuance 99.597, Yielding 2.14%.

4. Met Life Global Funding Inc. (USD) 0.95% 7/2/2025 144A (06/29/2020): 750MM Secured Notes, Price at Issuance 99.825, Yielding .99%.

5. Met Life Global Funding Inc. (USD) 0.95% 7/2/2025 Reg S (06/29/2020): 750MM Secured Notes, Price at Issuance 99.825, Yielding .99%.

6. Equitable Financial Life (USD) 1.4% 7/7/2025 144A (06/29/2020): 650MM Secured Notes, Price at Issuance 99.817, Yielding 1.44%.

7. Equitable Financial Life (USD) 1.4% 7/7/2025 Reg S (06/29/2020): 650MM Secured Notes, Price at Issuance 99.817, Yielding 1.44%.

8. Children’s Hospital Corp (USD) 2.585% 2/1/2050 (06/29/2020): 300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.59%.

9. Deutsche Bank AG of New York (USD) VAR% 7/8/2031 (06/29/2020): 500MM Subordinated Notes, Price at Issuance 100.

10. Sumitomo Mitsui Fin Grp Inc. (USD) 2.13% 7/8/2030 (06/29/2020): 1500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.13%.

Additional Commentary

NEW ISSUANCE WATCH: on 06/30/2020 participants welcome a $500MM new corporate-bond offering by AIG Global Funding.
Top Widening Loans Top Narrowing Loans
Superior Industries Intl. Inc. (USD) TLB L+400 05/23/2024
Hurtigruten Group AS (EUR) TLC E+800 06/16/2023
Syncsort Inc. (USD) TLB L+600 08/16/2024
Automate Intermediate Hldg II Sarl (EUR) TLB E+350 07/22/2026
Automate Intermediate Hldg II Sarl (USD) TLB L+425 07/22/2026
Distributed Power Inc. (USD) TLB L+325 11/02/2025
PortAventura World (EUR) TLB E+350 06/14/2024
Moneygram Intl. Inc. (USD) TLB L+600 06/30/2023
American Renal Holdings Inc. (USD) TLB L+325 06/22/2024
Philadelphia Energy Solutions (USD) TLA L+625 12/31/2022

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 06/30/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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