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North American Bond Research – June 8, 2020

Posted on June 8, 2020
HIGH YIELD BOND RESEARCH
June 8, 2020
Bond Markets

AS AMERICA OPENS UP AND STIMULUS MONEY POURS INTO THE ECONOMY, MARKETS KEEP SOARING. TRAVEL, AIR, AND LEISURE ALL JUMPED UP PUSHING THE MARKETS HIGHER.  10 Year Treasury notes were down 2 basis points. S&P +1.2%, Dow +1.7%, NASDAQ +1.13%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 6.8 MILLION+ CASES AND 410000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 2.05 MILLION+ CASES AND 113000+ 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. 3.5% 4/15/2025 144A +0.1%
  Ford Motor Co. 9% 4/22/2025 +0.6%
  Hertz Corp. 6.25% 10/15/2022 +15.7%
  Oasis Petroleum Inc. 6.875% 3/15/2022 (1) +15.6%
  Petrobras Global Finance BV 7.375% 1/17/2027 +0.6%
–   T-Mobile USA Inc. 3.875% 4/15/2030 144A -0.2%
  Azul Investments LLP 5.875% 10/26/2024 Reg S -0.6%
  WPX Energy Inc. 5.875% 6/15/2028 -0.4%
  Teva Pharmaceutical Industries LTD 3.15% 10/1/2026 -0.4%
T-Mobile USA Inc.   3.875% 4/15/2030 144A
T-Mobile USA Inc.   3.5% 4/15/2025 144A
Ford Motor Co.   9% 4/22/2025
Hertz Corp.   6.25% 10/15/2022
Oasis Petroleum Inc.   6.875% 3/15/2022 (1)
Petrobras Global Finance BV   7.375% 1/17/2027
Azul Investments LLP   5.875% 10/26/2024 Reg S
Petrobras Global Finance BV   6.85% 6/5/2115
T-Mobile USA Inc.   3.75% 4/15/2027 144A
Whiting Petroleum Corp.   6.625% 1/15/2026
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.14% 1.49% 4.01% -0.15% 1.57% 8.37%
Mining 1.55% 3.84% 24.43% -11.85% -16.15% -9.48%
Construction 0.11% 1.77% 6.05% -3.10% -0.74% 6.93%
Manufacturing 0.49% 2.19% 7.17% -2.35% -1.07% 6.31%
Transportion, Communication, Electric/Gas 0.28% 1.55% 5.59% -0.21% 1.56% 8.22%
Wholesale 0.35% 2.06% 8.34% -1.81% -1.49% 4.85%
Retail 0.44% 2.32% 6.98% -4.46% -3.95% 3.03%
Finance, Insurance, Real-Estate 0.59% 2.58% 5.86% -4.07% -2.87% 4.42%
Services 0.44% 2.49% 7.69% -1.41% -0.73% 6.91%
Public Administration 0.12% 2.00% 5.40% -2.85% -0.46% 7.79%
Energy 1.44% 3.94% 23.56% -9.73% -13.50% -7.17%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 06/08/2020)
1. 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

2. Hamilton Projects Acquiror LLC: $1.015B credit facilities: $115MM revolver; $900MM TLB

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

4. Mohegan Tribal Gaming Authority: $100MM first lein TL (Caa1)

5. Radio Systems Corp.: $725MM Loans: $100M ABL Facility; $625MM Senior secured bridge loan

Additional Commentary

NEW ISSUANCE WATCH: No New Issues
Top Widening Loans Top Narrowing Loans
Dubois Chemicals Inc. (USD) TL L+850 10/08/2027
Hanjin Intl. Corp. (USD) TLB L+250 09/20/2020
Sundyne US Purchaser (USD) TLB L+425 03/17/2027
SeaWorld Parks & Entertainment Inc. (USD) TLB5 L+300 03/31/2024
Koninklijke Ten Cate NV (EUR) TLB E+350 01/27/2023
American Tire Distributors Inc. (USD) TL DIP PIK L+600 09/01/2023
Aristotle Corp. (USD) TLA L+450 05/31/2021
Mavenir Inc. (USD) TLB L+600 05/08/2025
Concordia International (USD) TL EXIT L+550 09/06/2024
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 06/08/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
June 8, 2020
Bond Markets

AS AMERICA OPENS UP AND STIMULUS MONEY POURS INTO THE ECONOMY, MARKETS KEEP SOARING. TRAVEL, AIR, AND LEISURE ALL JUMPED UP PUSHING THE MARKETS HIGHER.  10 Year Treasury notes were down 2 basis points. S&P +1.2%, Dow +1.7%, NASDAQ +1.13%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 6.8 MILLION+ CASES AND 410000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 2.05 MILLION+ CASES AND 113000+ 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
+   Dupont de Nemours Inc. 2.169% 5/1/2023 +0.7%
  Boeing Co. 5.93% 5/1/2060 +0.7%
  Amazon.com Inc. 0.8% 6/3/2025 +0.3%
  CVS Health Corp. 4.3% 3/25/2028 +0.1%
  AerCap Ireland Capital LTD 6.5% 7/15/2025 +0.4%
–   Boeing Co. 5.15% 5/1/2030 -0.4%
  Boeing Co. 4.875% 5/1/2025 -1.0%
  AT&T Inc. 2.75% 6/1/2031 -0.4%
  Amazon.com Inc. 2.5% 6/3/2050 -0.3%
  Citigroup Inc. 4.412% 3/31/2031 -1.9%
Boeing Co.   5.15% 5/1/2030
Boeing Co.   5.93% 5/1/2060
Dupont de Nemours Inc.   2.169% 5/1/2023
Boeing Co.   4.875% 5/1/2025
Amazon.com Inc.   0.8% 6/3/2025
AT&T Inc.   2.75% 6/1/2031
Amazon.com Inc.   2.5% 6/3/2050
CVS Health Corp.   4.3% 3/25/2028
AerCap Ireland Capital LTD   6.5% 7/15/2025
Amazon.com Inc.   2.7% 6/3/2060
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.36% 1.22% 6.65% -2.41% 0.79% 7.51%
Construction 0.20% 0.02% 2.49% -3.41% 1.27% 6.34%
Manufacturing 0.04% 0.17% 1.89% -0.64% 3.94% 10.45%
Transportion, Communication, Electric/Gas -0.04% 0.10% 1.60% -1.24% 4.23% 11.95%
Wholesale 0.05% 0.65% 2.64% -1.41% 2.50% 9.22%
Retail 0.01% 0.07% 1.74% -0.29% 4.41% 12.01%
Finance, Insurance, Real-Estate 0.03% 0.44% 1.75% -0.76% 2.96% 7.89%
Services -0.05% 0.18% 1.39% -1.41% 3.39% 9.52%
Public Administration -0.08% -0.18% 0.01% 0.89% 4.00% 5.27%
Energy 0.35% 1.36% 7.16% -2.08% 0.80% 7.64%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Magna International Inc. (USD) 2.45% 6/15/2030 (06/08/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.569, Yielding 2.5%.

2. Brixmor Operating Partnership LP (USD) 4.05% 7/1/2030 (06/08/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.776, Yielding 4.08%.

3. Roper Technologies Inc. (USD) 2% 6/30/2030 (06/08/2020): 600MM Senior Unsecured Notes, Price at Issuance 98.877, Yielding 2.12%.

4. Plains All American Pipeline LP (USD) 3.8% 9/15/2030 (06/08/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.794, Yielding 3.82%.

5. Duke Energy Florida Inc. (USD) 1.75% 6/15/2030 (06/08/2020): 500MM Secured Notes, Price at Issuance 99.863, Yielding 1.76%.

6. Northern States Power Co. of Minnesota (USD) 2.6% 6/1/2051 (06/08/2020): 700MM Secured Notes, Price at Issuance 98.118, Yielding 2.69%.

7. Lloyds Banking Group PLC (USD) VAR% 6/15/2023 (06/08/2020): 1000MM Senior Unsecured Notes, Price at Issuance 100, Yielding 1.33%.

8. Equinix Inc. (USD) 2.15% 7/15/2030 (06/08/2020): 1100MM Senior Unsecured Notes, Price at Issuance 99.711, Yielding 2.18%.

9. Equinix Inc. (USD) 3% 7/15/2050 (06/08/2020): 500MM Senior Unsecured Notes, Price at Issuance 98.264, Yielding 3.09%.

10. Equinix Inc. (USD) 1.25% 7/15/2025 (06/08/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.77, Yielding 1.3%.

Additional Commentary

NEW ISSUANCE WATCH: on 06/05/2020 participants welcome a $500MM new corporate-bond offering by Duke Energy Florida Inc.
Top Widening Loans Top Narrowing Loans
Dubois Chemicals Inc. (USD) TL L+850 10/08/2027
Hanjin Intl. Corp. (USD) TLB L+250 09/20/2020
Sundyne US Purchaser (USD) TLB L+425 03/17/2027
SeaWorld Parks & Entertainment Inc. (USD) TLB5 L+300 03/31/2024
Koninklijke Ten Cate NV (EUR) TLB E+350 01/27/2023
American Tire Distributors Inc. (USD) TL DIP PIK L+600 09/01/2023
Aristotle Corp. (USD) TLA L+450 05/31/2021
Mavenir Inc. (USD) TLB L+600 05/08/2025
Concordia International (USD) TL EXIT L+550 09/06/2024
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 06/08/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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