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North American Bond Research – March 13, 2020

Posted on March 13, 2020
HIGH YIELD BOND RESEARCH
March 13, 2020
Bond Markets

MARKETS ROARED UP AS PRESIDENT TRUMP DECLARED A STATE OF EMERGENCY UNDER THE STAFFORD ACT AND FREED UP $50 BILLION IN FEDERAL AID FOR STATES AND MUNICIPALITIES. 10 Year Treasury notes were up 10.2 basis points.  S&P +9.29%, Dow +9.36%, NASDAQ  +9.35%.
CORONA VIRUS UPDATE: CHINA TO DATE HAS HAD 125000+ CASES AND 5000+ 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
+   Deutsche Bank AG 6% PERP +2.6%
  Numericable-SFR SA 7.375% 5/1/2026 144A +3.4%
  HCA Inc. 3.5% 9/1/2030 +2.5%
  Ypso Finance Bis SA 6% 2/15/2028 144A +2.8%
–   Crown Castle Intl Corp. 5.25% 1/15/2023 -0.2%
  CCO Hldg LLC 5.5% 5/1/2026 144A -0.9%
  Vodafone Group PLC 7% 4/4/2079 -0.8%
  Dish DBS Corp. 6.75% 6/1/2021 (1) -2.2%
Crown Castle Intl Corp.   5.25% 1/15/2023
Deutsche Bank AG   6% PERP
Numericable-SFR SA   7.375% 5/1/2026 144A
HCA Inc.   3.5% 9/1/2030
Ypso Finance Bis SA   6% 2/15/2028 144A
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -3.63% -7.94% -8.68% -6.34% -7.22% 5.87%
Mining -5.91% -24.63% -28.32% -26.79% -29.29% -21.03%
Construction -0.93% -3.56% -3.63% -1.49% -1.82% 9.74%
Manufacturing -2.24% -6.00% -6.36% -3.87% -4.73% 4.56%
Transportion, Communication, Electric/Gas -2.67% -6.81% -7.13% -3.98% -5.04% 5.89%
Wholesale -1.90% -6.23% -7.07% -4.69% -5.83% 2.79%
Retail -2.74% -6.41% -7.33% -4.58% -5.89% 6.19%
Finance, Insurance, Real-Estate -1.94% -5.10% -5.56% -3.39% -4.12% 5.96%
Services -2.54% -5.95% -6.56% -4.49% -5.30% 4.59%
Public Administration -3.06% -8.23% -7.55% -4.71% -5.96% 3.36%
Energy -6.09% -24.52% -27.57% -25.25% -28.20% -20.04%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 03/13/2020)
1. Championx: $537MM TL

2. Xperi Corp. : $1.1B seven-year secured covenant lite TLB

3. Capstone Logistics Acquisition Inc.: $340MM TLB (B3/B-)

4. Cornerstone Ondemand Inc.: $1.135MM senior secured credit facilities: $150MM revolver; $985MM TLB

5. 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

6. Innovate Xcessories & Services LLC: $695MM credit facilities: $75MM revolver; $620MM TL(B2/B)

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

8. Open Lending LLC: $225MM TLB

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

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
Revlon Consumer Products Corp. (USD) RC L+300 04/17/2020
Playa Resorts Holding BV (USD) TLB L+275 04/27/2024
Casper Bidco (EUR) TLB E+475 07/30/2026
CDS US Intermediate Holdings Inc. (USD) TL2 L+825 06/24/2023
Onex Schumacher Finance LP (USD) TL L+400 07/31/2022
United Site Services Inc (USD) TL2 L+775 08/25/2025
Audio Visual Services Corp. (USD) TLB L+325 03/01/2025
Duravant LLC (USD) TL L+725 07/19/2025
Consolidated Precision Products (USD) TL2 L+775 04/30/2026
Merlin Entertainments PLC (USD) TLB L+325 11/05/2026
Comexposium SAS (EUR) TLB E+400 01/31/2026

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  33 bp (basis points), as of 03/11/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
March 13, 2020
Bond Markets

WORLD HEALTH ORGANIZATION DECLARES THAT THE CORONAVIRUS IS A PANDEMIC. STOCKS FELL ALL DAY.  10 Year Treasury notes were up 7.2 basis points.  S&P –4.89%, Dow -5.86%, NASDAQ  -4.7%.
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
+   Goldman Sachs Group Inc. 2.6% 2/7/2030 +0.9%
  CVS Health Corp. 4.3% 3/25/2028 +0.5%
  General Electric Co. FLT% PERP (1) +1.8%
  GE Capital Intl. Funding Co. 4.418% 11/15/2035 +1.2%
–   Novartis Capital Corp. 2.2% 8/14/2030 -1.6%
  CVS Health Corp. 3.7% 3/9/2023 -0.4%
  Citigroup Inc. 2.976% 11/5/2030 -0.3%
  Crown Castle Intl Corp. 5.25% 1/15/2023 -0.2%
Goldman Sachs Group Inc.   2.6% 2/7/2030
CVS Health Corp.   4.3% 3/25/2028
General Electric Co.   FLT% PERP (1)
GE Capital Intl. Funding Co.   4.418% 11/15/2035
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.64% -2.00% -1.13% 2.17% 1.40% 6.07%
Mining -2.12% -10.24% -9.24% -6.97% -7.59% 3.56%
Construction -1.30% -3.93% -2.22% 0.39% 0.21% 8.28%
Manufacturing -1.50% -3.15% -1.07% 1.33% 0.98% 10.67%
Transportion, Communication, Electric/Gas -2.40% -5.41% -2.92% -0.05% -0.33% 11.56%
Wholesale -1.45% -3.36% -1.87% 0.70% 0.19% 10.89%
Retail -1.74% -3.48% -1.16% 1.19% 0.88% 11.37%
Finance, Insurance, Real-Estate -0.97% -2.45% -0.71% 1.19% 0.88% 8.48%
Services -1.61% -3.04% -0.70% 1.65% 1.30% 10.96%
Public Administration -0.06% 0.16% 2.14% 3.23% 3.05% 6.44%
Energy -2.15% -10.90% -9.92% -7.65% -8.33% 2.29%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Ohio Power Co. (USD) 2.6% 4/1/2030 (03/13/2020): 350MM Senior Unsecured Notes, Price at Issuance 99.894, Yielding 2.61%.
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
Revlon Consumer Products Corp. (USD) RC L+300 04/17/2020
Playa Resorts Holding BV (USD) TLB L+275 04/27/2024
Casper Bidco (EUR) TLB E+475 07/30/2026
CDS US Intermediate Holdings Inc. (USD) TL2 L+825 06/24/2023
Onex Schumacher Finance LP (USD) TL L+400 07/31/2022
Doha Bank (USD) TL L+100 12/20/2020
Commercial Bank of Qatar (USD) TL 03/23/2020
United Site Services Inc (USD) TL2 L+775 08/25/2025
Audio Visual Services Corp. (USD) TLB L+325 03/01/2025
Duravant LLC (USD) TL L+725 07/19/2025
Consolidated Precision Products (USD) TL2 L+775 04/30/2026
Merlin Entertainments PLC (USD) TLB L+325 11/05/2026
Comexposium SAS (EUR) TLB E+400 01/31/2026
LA Fitness PLC (USD) TLB L+325 04/18/2025

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 33 bp (basis points), as of 03/11/2020
  • 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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