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North American Bond Research – March 10, 2020

Posted on March 10, 2020
HIGH YIELD BOND RESEARCH
March 10, 2020
Bond Markets

PRESIDENT’S TRUMP PROPOSAL TO SUSPEND ALL PAYROLL TAX FOR THE REST OF THE YEAR SENT STOCKS SOARING! 10 Year Treasury notes were up 49 basis points.  S&P +4.94%, Dow +4.89%, NASDAQ  +4.94%.
CORONA VIRUS UPDATE: CHINA TO DATE HAS HAD 113000+ CASES AND 4000+ DEATHS. THE VIRUS SEEMS TO BE SLOWING DOWN IN CHINA AS NEW CASES AND DEATHS SEEM TO BE ACCELERATING INTERNATIONALLY.       Among high-grade bonds showing topmost price gains at appreciable volumes traded, JC Penney Co Inc (USD) 7.125% 11/15/2023 made analysts’ ‘Conviction Buy’ list. (See the chart below for JC Penney Co Inc. bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Petrobras Global Finance BV 6.85% 6/5/2115 +0.4%
  Sprint Nextel Corp. 7.875% 9/15/2023 +2.1%
  Expedia Inc. 3.8% 2/15/2028 (1) +1.5%
  Hess Corp. 5.6% 2/15/2041 +4.6%
–   Sabine Pass Liquefaction LLC 5.625% 3/1/2025 -6.3%
  Micron Technology Inc. 4.663% 2/15/2030 -1.8%
  WPX Energy Inc. 5.75% 6/1/2026 -0.1%
  Micron Technology Inc. 4.975% 2/6/2026 -1.1%
  SM Energy Co. 6.75% 9/15/2026 -1.2%
Petrobras Global Finance BV   6.85% 6/5/2115
Sprint Nextel Corp.   7.875% 9/15/2023
Sabine Pass Liquefaction LLC   5.625% 3/1/2025
Micron Technology Inc.   4.663% 2/15/2030
Expedia Inc.   3.8% 2/15/2028 (1)
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -1.41% -1.36% -2.49% -0.09% -1.20% 13.19%
Mining -13.18% -14.72% -19.39% -17.77% -20.48% -14.06%
Construction -1.05% -0.76% -1.01% 1.22% 0.63% 12.25%
Manufacturing -1.36% -1.44% -1.98% 0.58% -0.56% 8.34%
Transportion, Communication, Electric/Gas -1.78% -1.83% -1.92% 0.90% -0.62% 9.55%
Wholesale -1.36% -1.38% -3.06% -0.39% -1.48% 6.75%
Retail -1.82% -2.08% -3.30% -0.45% -1.99% 9.95%
Finance, Insurance, Real-Estate -1.22% -1.16% -2.05% 0.27% -0.72% 9.07%
Services -1.48% -1.60% -2.46% -0.13% -1.31% 8.06%
Public Administration -1.44% -0.08% -0.01% 2.69% 1.45% 11.69%
Energy -12.22% -13.16% -17.32% -14.82% -17.97% -11.59%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 03/10/2020)
1. CJ Foods Inc.: $285MM TLB

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

3. T-Mobile USA Inc.: $8B senior secured credit facilities: $4B five-year revolver; $4B seven-year cove-lite TL

4. Tata Chemicals North America Inc. : $380MM TL (Ba3)

5. Snapav: $390MM term loans: $290MM TL (B2); $100MM TL

6. Service Logic: $140MM bank debt: $40MM TL; $100MM DD TL

7. Open Lending LLC: $225MM TLB

8. Instructure: $825MM senior secured credit facilities: $50MM revolver; $775MM TL

9. AVI-SPL: $370MM covenant lite TLB (B2/B)

10. Capstone Logistics Acquisition Inc.: $395MM TLB

Additional Commentary

NEW ISSUANCE WATCH: on 02/21/2020 participants welcome a $600MM new corporate-bond offering by
Mattamy Group.  The most recent data showed money flowed in of ETF/mutual funds for the week ended 01/10/2020, with a net inflow of $9.8 billion.
Top Widening Loans Top Narrowing Loans
Anastasia Beverly Hills (USD) TLB L+375 08/07/2025
Lightstone Holdco LLC (USD) TLB L+375 01/30/2024
United Natural Foods Inc. (USD) TLB L+425 10/22/2025
Travelport Finance Luxembourg Sarl (USD) TL L+500 05/30/2026
Tivity Health Inc. (USD) TLB L+525 03/08/2026
Waterbridge Operating LLC (USD) TLB L+575 06/18/2026
AMC Entertainment Hldg Inc. (USD) TLB L+300 04/22/2026
Casper Bidco (EUR) TLB3 E+387.5 07/30/2026
Cvent Inc. (USD) TL L+375 11/02/2024
ExGen Renewables I LLC (USD) TLB L+300 11/16/2024
Blackstone CQP Holdco LP (USD) TL L+350 09/30/2024

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  44 bp (basis points), as of 03/09/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
March 10, 2020
Bond Markets

PRESIDENT’S TRUMP PROPOSAL TO SUSPEND ALL PAYROLL TAX FOR THE REST OF THE YEAR SENT STOCKS SOARING! 10 Year Treasury notes were up 49 basis points.  S&P +4.94%, Dow +4.89%, NASDAQ  +4.94%.
CORONA VIRUS UPDATE: CHINA TO DATE HAS HAD 113000+ CASES AND 4000+ DEATHS. THE VIRUS SEEMS TO BE SLOWING DOWN IN CHINA AS NEW CASES AND DEATHS SEEM TO BE ACCELERATING INTERNATIONALLY.     (Advantage Data Inc.). Extensive corporate-bond index data showed a net daily grade increment for high-grade versus high-yield constituents. High-yield bonds edged out high-grade debt as of 3 PM, London time.  Among European high-yield bonds showing a concurrence of top price gains at appreciable volumes traded,  Bombardier Inc. (USD) 7.5% 12/1/2024 Reg S made some analysts ‘Conviction buy’ lists. (See the chart for Bombardier Inc. bonds below). Pierre Robert
Key Gainers and Losers Volume Leaders
+   Occidental Petroleum Corp. 4.1% 2/1/2021 +1.9%
  JP Morgan Chase & Co. 2.739% 10/15/2030 +0.7%
  GE Capital Intl. Funding Co. 4.418% 11/15/2035 +0.2%
  BP Capital Markets PLC 3% 2/24/2050 +1.1%
–   Anheuser-Busch Inbev Worldwide Inc. 5.55% 1/23/2049 -1.3%
  Exxon Mobil Corp. 3.095% 8/16/2049 -4.2%
  CVS Health Corp. 5.05% 3/25/2048 -0.8%
  JP Morgan Chase & Co. 4.6% PERP -0.4%
Anheuser-Busch Inbev Worldwide Inc.   5.55% 1/23/2049
Occidental Petroleum Corp.   4.1% 2/1/2021
Exxon Mobil Corp.   3.095% 8/16/2049
Occidental Petroleum Corp.   3.5% 8/15/2029
CVS Health Corp.   5.05% 3/25/2048
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.99% -0.46% 0.16% 3.20% 2.37% 6.07%
Mining -2.30% -1.22% -0.56% 1.96% 1.19% 11.52%
Construction -0.71% 0.90% 1.69% 4.34% 4.07% 12.02%
Manufacturing -0.41% 1.05% 2.35% 4.79% 4.53% 14.42%
Transportion, Communication, Electric/Gas -1.11% 0.73% 2.44% 5.45% 5.20% 17.71%
Wholesale -0.48% 0.47% 1.66% 3.83% 3.45% 13.78%
Retail -0.49% 1.12% 2.62% 4.93% 4.71% 15.79%
Finance, Insurance, Real-Estate -0.41% 0.52% 1.74% 3.62% 3.37% 11.20%
Services -0.38% 0.89% 2.38% 4.59% 4.40% 13.35%
Public Administration 0.15% 1.12% 2.35% 3.27% 3.16% 6.93%
Energy -2.70% -1.68% -0.98% 1.56% 0.68% 11.26%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. JPMorgan Chase & Co. (USD) VAR% 3/13/2026 (03/10/2020): 2250MM Senior Unsecured Notes, Price at Issuance 100.

2. Willow No. 2 Ireland PLC (USD) 1.9% 3/15/2022 (03/10/2020): 141MM Secured Notes, Price at Issuance 100, Yielding 1.9%.

3. Johns Hopkins University (USD) 2.813% 1/1/2060 (03/10/2020): 370MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.81%.

4. Duke Energy Indiana Inc. (USD) 2.75% 4/1/2050 (03/10/2020): 550MM Secured Notes, Price at Issuance 99.877, Yielding 2.76%.

5. Textron Inc. (USD) 3% 6/1/2030 (03/10/2020): 650MM Senior Unsecured Notes, Price at Issuance 99.523, Yielding 3.05%.

6. Rice University (USD) 2.598% 5/15/2050 (03/10/2020): 200MM Unsecured Notes, Price at Issuance 100, Yielding 2.6%.

7. Starbucks Corp. (USD) 3.35% 3/12/2050 (03/10/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.232, Yielding 3.39%.

8. Toronto-Dominion Bank (CAD) 1.943% 3/13/2025 (03/10/2020): 1750MM Senior Unsecured Notes, Price at Issuance 100, Yielding 1.94%.

Additional Commentary

NEW ISSUANCE WATCH: on 03/06/2020 participants welcome a $700MM new corporate-bond offering by Key BankThe most recent data showed money flowed in of ETF/mutual funds for the week ended 01/10/2020, with a net inflow of $9.8 billion.
Top Widening Loans Top Narrowing Loans
Anastasia Beverly Hills (USD) TLB L+375 08/07/2025
Lightstone Holdco LLC (USD) TLB L+375 01/30/2024
United Natural Foods Inc. (USD) TLB L+425 10/22/2025
Travelport Finance Luxembourg Sarl (USD) TL L+500 05/30/2026
Tivity Health Inc. (USD) TLB L+525 03/08/2026
Alorica (USD) TL L+375 06/30/2022
Waterbridge Operating LLC (USD) TLB L+575 06/18/2026
AMC Entertainment Hldg Inc. (USD) TLB L+300 04/22/2026
Casper Bidco (EUR) TLB3 E+387.5 07/30/2026
Cvent Inc. (USD) TL L+375 11/02/2024
ExGen Renewables I LLC (USD) TLB L+300 11/16/2024
Blackstone CQP Holdco LP (USD) TL L+350 09/30/2024

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

Copyright 2019 Advantage Data Inc. All Rights Reserved. http://www.advantagedata.com

Information in this document should not be regarded as an offer to sell or solicitation of an offer to buy bonds or any financial instruments referred to herein. All information provided in this document is believed to be accurate. However, Advantage Data and its sources make no warranties, either express or implied, as to any matter whatsoever, including but not limited to warranties of merchantability or fitness for a particular purpose. Opinions in this document are subject to change without notice. Electronic redistribution, photocopying and any other electronic or mechanical reproduction is strictly prohibited without prior written permission from Advantage Data Inc.

 


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