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North American Bond Research – June 9, 2020

Posted on June 9, 2020
HIGH YIELD BOND RESEARCH
June 9, 2020
Bond Markets

MARKETS WERE MIXED AS PROFIT TAKING CAUSED MARKETS TO PAUSE. OIL WAS UP SLIGHTLY. EUROPE WAS NOTICIBLY LOWER AFTER NEWS THAT THEIR 1ST QUARTER SAW GDP CONTRACT 3.6%. 10 Year Treasury notes were down 5.5 basis points. S&P -0.78%, Dow -1.09%, NASDAQ +0.29%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 7.3 MILLION+ CASES AND 412000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 2.1 MILLION+ CASES AND 114000+ 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. 3.75% 4/15/2027 144A +0.4%
  NBM US Hldg, Inc. 6.625% 8/6/2029 RegS +1.4%
  T-Mobile USA Inc. 3.5% 4/15/2025 144A +0.0%
  CBL & Associates LP 4.6% 10/15/2024 +16.2%
  Occidental Petroleum Corp. 6.6% 3/15/2046 +1.9%
–   Hertz Corp. 6.25% 10/15/2022 -4.9%
  T-Mobile USA Inc. 3.875% 4/15/2030 144A -0.5%
  Petrobras Global Finance BV 6.85% 6/5/2115 -2.6%
  Ford Motor Co. 9.625% 4/22/2030 -1.5%
  Chesapeake Energy Corp. 11.5% 1/1/2025 Reg S -21.4%
Hertz Corp.   6.25% 10/15/2022
T-Mobile USA Inc.   3.875% 4/15/2030 144A
Petrobras Global Finance BV   6.85% 6/5/2115
Ford Motor Co.   9% 4/22/2025
T-Mobile USA Inc.   3.75% 4/15/2027 144A
Ford Motor Co.   9.625% 4/22/2030
NBM US Hldg, Inc.   6.625% 8/6/2029 RegS
T-Mobile USA Inc.   3.5% 4/15/2025 144A
Chesapeake Energy Corp.   11.5% 1/1/2025 Reg S
Oasis Petroleum Inc.   6.875% 3/15/2022 (1)
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.12% 1.53% 3.44% 0.57% 2.05% 8.20%
Mining 1.74% 4.69% 20.59% -8.50% -13.80% -7.24%
Construction 0.25% 1.82% 6.23% -2.08% -0.05% 7.43%
Manufacturing 0.34% 2.52% 7.37% -1.38% -0.39% 6.54%
Transportion, Communication, Electric/Gas 0.27% 1.84% 5.53% 0.48% 1.87% 8.23%
Wholesale 0.37% 2.44% 7.03% -0.77% -0.43% 5.77%
Retail 0.54% 3.15% 9.14% -3.68% -3.19% 3.17%
Finance, Insurance, Real-Estate 0.41% 2.86% 6.12% -2.71% -1.64% 5.38%
Services 0.21% 2.60% 7.29% -0.47% -0.07% 6.90%
Public Administration 0.73% 3.04% 6.48% -2.15% 0.70% 8.55%
Energy 1.61% 4.93% 19.91% -6.50% -11.22% -5.49%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Sirius XM Radio Inc. (USD) 4.125% 7/1/2030 Reg S (06/08/2020): 1500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.13%.

2. Sirius XM Radio Inc. (USD) 4.125% 7/1/2030 144A (06/08/2020): 1500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.13%.

3. Griffon Corp. (USD) 5.75% 3/1/2028 144A (06/08/2020): 150MM Senior Unsecured Notes, Price at Issuance 100.25, Yielding 5.71%.

4. International Game Technology (USD) 5.25% 1/15/2029 144A (06/08/2020): 750MM First Lien Notes, Price at Issuance 100, Yielding 5.25%.

5. Griffon Corp. (USD) 5.75% 3/1/2028 Reg S (06/08/2020): 150MM Senior Unsecured Notes, Price at Issuance 100.25, Yielding 5.71%.

6. International Game Technology (USD) 5.25% 1/15/2029 Reg S (06/08/2020): 750MM First Lien Notes, Price at Issuance 100, Yielding 5.25%.

7. BWX Technologies Inc. (USD) 4.125% 6/30/2028 144A (06/09/2020): 400MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.13%.

8. HTA Group Ltd (USD) 7% 12/18/2025 144A (06/09/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.439, Yielding 7.12%.

9. Realogy Group LLC (USD) 7.625% 6/15/2025 Reg S (06/09/2020): 550MM Second Lien Notes, Price at Issuance 100, Yielding 7.63%.

10. Hillenbrand Inc. (USD) 5.75% 6/15/2025 (06/09/2020): 400MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.75%.

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

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

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

8. Xplorenet Communictations Inc.: $1.425B credit facilities (B3/B-): $150MM revolver; $1.275B first-lien TL

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

10. Xplorenet Communictations Inc.: $1.425B credit facilities (B3/B-): $150MM revolver; $1.275B first-lien TL

Additional Commentary

NEW ISSUANCE WATCH: Sirus XM Radio Inc issued $1500MM in notes.
Top Widening Loans Top Narrowing Loans
GGP Inc. (USD) TLB L+250 08/24/2025
Unifrax Corp. (USD) TLB L+375 11/05/2025
GGP Inc. (USD) TLA2 L+250 08/24/2023
Verifone Inc. (USD) TL L+400 08/20/2025
Coinmach Service Corp. (USD) TL 06/07/2023
ProFrac Services LLC (USD) TLB L+575 09/06/2023
Distributed Power Inc. (USD) TLB L+325 11/02/2025
Ball Corp. (USD) TLA L+150 03/21/2024
Mavis Tire Supply LLC (USD) TL L+325 03/20/2025
Allegion PLC (USD) TLA L+125 09/12/2022

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 15 bp (basis points), as of 06/09/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
June 9, 2020
Bond Markets

MARKETS WERE MIXED AS PROFIT TAKING CAUSED MARKETS TO PAUSE. OIL WAS UP SLIGHTLY. EUROPE WAS NOTICIBLY LOWER AFTER NEWS THAT THEIR 1ST QUARTER SAW GDP CONTRACT 3.6%. 10 Year Treasury notes were down 5.5 basis points. S&P -.78%, Dow -1.09%, NASDAQ +0.29%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 7.3 MILLION+ CASES AND 412000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 2.1 MILLION+ CASES AND 114000+ 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
+   CVS Health Corp. 5.05% 3/25/2048 +0.8%
  Kroger Co. 3.95% 1/15/2050 +0.4%
  Viacom Inc. 4.75% 5/15/2025 +0.2%
  Hormel Foods Corp. 1.8% 6/11/2030 +0.1%
  GlaxoSmithKline Capital PLC 3.125% 5/14/2021 +0.1%
–   Southwest Airlines Co. 1.25% 5/1/2025 -3.1%
  Marriott Intl Inc. 4.625% 6/15/2030 -0.6%
  Comcast Corp. 2.8% 1/15/2051 -0.6%
  Southwest Airlines Co. 5.125% 6/15/2027 -0.9%
  Dupont de Nemours Inc. 2.169% 5/1/2023 -1.0%
Southwest Airlines Co.   1.25% 5/1/2025
Marriott Intl Inc.   4.625% 6/15/2030
Comcast Corp.   2.8% 1/15/2051
Southwest Airlines Co.   5.125% 6/15/2027
Dupont de Nemours Inc.   2.169% 5/1/2023
Anheuser-Busch Inbev Worldwide Inc.   5.55% 1/23/2049
Cigna Corp.   2.4% 3/15/2030
Anheuser-Busch Inbev Worldwide Inc.   4.5% 6/1/2050
CVS Health Corp.   5.05% 3/25/2048
BNP Paribas   2.219% 6/9/2026 Reg S
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.45% 1.49% 6.83% -2.32% 1.22% 7.52%
Construction 0.23% 0.32% 2.93% -3.43% 1.61% 6.25%
Manufacturing 0.18% 0.39% 2.73% -0.78% 4.16% 10.31%
Transportion, Communication, Electric/Gas 0.31% 0.41% 2.83% -1.40% 4.64% 11.74%
Wholesale 0.24% 0.72% 3.03% -1.15% 2.80% 9.07%
Retail 0.33% 0.32% 2.85% -0.25% 5.03% 12.21%
Finance, Insurance, Real-Estate 0.21% 0.65% 2.33% -0.56% 3.30% 8.00%
Services 0.21% 0.35% 2.27% -1.38% 3.79% 9.59%
Public Administration -0.03% -0.31% -0.18% 0.56% 3.92% 5.02%
Energy 0.53% 1.76% 7.50% -1.71% 1.43% 7.85%
 
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. Roper Technologies Inc. (USD) 2% 6/30/2030 (06/08/2020): 600MM Senior Unsecured Notes, Price at Issuance 98.877, Yielding 2.12%.

3. 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%.

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

5. 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%.

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

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

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

9. 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 06/09/2020 participants welcome a $500MM new corporate-bond offering by Duke Energy Florida Inc.
Top Widening Loans Top Narrowing Loans
GGP Inc. (USD) TLB L+250 08/24/2025
Unifrax Corp. (USD) TLB L+375 11/05/2025
GGP Inc. (USD) TLA2 L+250 08/24/2023
Verifone Inc. (USD) TL L+400 08/20/2025
Coinmach Service Corp. (USD) TL 06/07/2023
ProFrac Services LLC (USD) TLB L+575 09/06/2023
Distributed Power Inc. (USD) TLB L+325 11/02/2025
Ball Corp. (USD) TLA L+150 03/21/2024
Mavis Tire Supply LLC (USD) TL L+325 03/20/2025
Allegion PLC (USD) TLA L+125 09/12/2022

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 15 bp (basis points), as of 06/09/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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