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North American Bond Research – March 24, 2020

Posted on March 24, 2020
HIGH YIELD BOND RESEARCH
March 24, 2020
Bond Markets

MARKETS SURGED IN ANTICIPATION OF THE SENATE PASSING A $1.8 TRILLION STIMULUS PACKAGE. ANTICIPATION OF A DEAL COMING TONIGHT IS HIGH. 10 Year Treasury notes were down 14.7 basis points. S&P +9.38%, Dow +11.37%, NASDAQ +8.12%
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 416000+ CASES AND 16300+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 52000+ CASES AND 670+ DEATHS.    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
+   Ford Motor Credit Co. 5.113% 5/3/2029 +11.2%
  HCA Inc. 3.5% 9/1/2030 +2.2%
  Tenet Healthcare Corp. 6.75% 6/15/2023 +2.7%
  Diamond 1 Finance Corp. / Diamond 2 Finance Corp. 7.125% 6/15/2024 144A +2.3%
–   Intl. Game Technology PLC 6.25% 2/15/2022 144A -4.2%
  Beacon Roofing Supply Inc. 4.875% 11/1/2025 144A -1.7%
  Lamb Weston Hldgs Inc. 4.625% 11/1/2024 -1.4%
  Intelsat Jackson Hldg SA 9.75% 7/15/2025 144A -2.4%
Ford Motor Credit Co.   5.113% 5/3/2029
HCA Inc.   3.5% 9/1/2030
Tenet Healthcare Corp.   6.75% 6/15/2023
Diamond 1 Finance Corp. / Diamond 2 Finance Corp.   7.125% 6/15/2024 144A
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.48% -9.76% -20.91% -19.03% -19.17% -9.49%
Mining -1.92% -16.97% -42.86% -42.10% -43.25% -35.11%
Construction -0.92% -7.37% -12.76% -10.30% -10.38% 0.38%
Manufacturing -1.28% -9.74% -18.07% -16.19% -16.19% -6.59%
Transportion, Communication, Electric/Gas -1.22% -9.63% -19.24% -17.19% -17.26% -7.16%
Wholesale -0.84% -8.58% -17.67% -16.20% -16.42% -7.24%
Retail -2.02% -10.47% -20.08% -18.34% -18.55% -4.73%
Finance, Insurance, Real-Estate -1.55% -9.88% -17.43% -15.76% -15.88% -5.11%
Services -1.75% -9.71% -18.48% -17.22% -17.30% -6.25%
Public Administration -1.52% -7.86% -19.26% -15.72% -16.45% -8.54%
Energy -1.59% -16.32% -42.76% -41.84% -43.05% -35.79%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 03/24/2020)
1. AVI-SPL: $370MM covenant lite TLB (B2/B)

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

3. Championx: $537MM TL

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

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

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

Additional Commentary

NEW ISSUANCE WATCH: on 03/24/2020 no new issuance occurred. 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
Reynolds Group Hldgs Inc. (EUR) TLB E+325 02/05/2023
US Ecology Inc. (USD) TLB L+250 11/01/2026
Flying Fortress Inc. (USD) TLB L+175 10/30/2022
TDC A/S (EUR) TLB E+275 06/11/2025
IVC Acquisition LTD (EUR) TLB2 E+400 02/07/2026
Encapsys LLC (USD) TL L+350 11/07/2024
Ceridian HCM Holdings Inc. (USD) TLB L+250 04/30/2025
Veresen Midstream LP (CAD) TL 04/20/2024
G-III Apparel Group LTD (USD) TLB L+525 12/01/2022
API Technologies Corp. (USD) TL L+425 05/09/2026

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  95 bp (basis points), as of 03/24/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
March 24, 2020
Bond Markets

MARKETS SURGED IN ANTICIPATION OF THE SENATE PASSING A $1.8 TRILLION STIMULUS PACKAGE. ANTICIPATION OF A DEAL COMING TONIGHT IS HIGH. 10 Year Treasury notes were down 14.7 basis points. S&P +9.38%, Dow +11.37%, NASDAQ +8.12%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 416000+ CASES AND 16300+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 52000+ CASES AND 670+ DEATHS.    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
+   Ford Motor Credit Co. 5.113% 5/3/2029 +11.2%
  HCA Inc. 3.5% 9/1/2030 +2.2%
  Tenet Healthcare Corp. 6.75% 6/15/2023 +2.7%
  Diamond 1 Finance Corp. / Diamond 2 Finance Corp. 7.125% 6/15/2024 144A +2.3%
–   Intl. Game Technology PLC 6.25% 2/15/2022 144A -4.2%
  Beacon Roofing Supply Inc. 4.875% 11/1/2025 144A -1.7%
  Lamb Weston Hldgs Inc. 4.625% 11/1/2024 -1.4%
  Intelsat Jackson Hldg SA 9.75% 7/15/2025 144A -2.4%
Ford Motor Credit Co.   5.113% 5/3/2029
HCA Inc.   3.5% 9/1/2030
Tenet Healthcare Corp.   6.75% 6/15/2023
Diamond 1 Finance Corp. / Diamond 2 Finance Corp.   7.125% 6/15/2024 144A
Ardagh Packaging Finance PLC   6% 2/15/2025 144A
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.48% -9.76% -20.91% -19.03% -19.17% -9.49%
Mining -1.92% -16.97% -42.86% -42.10% -43.25% -35.11%
Construction -0.92% -7.37% -12.76% -10.30% -10.38% 0.38%
Manufacturing -1.28% -9.74% -18.07% -16.19% -16.19% -6.59%
Transportion, Communication, Electric/Gas -1.22% -9.63% -19.24% -17.19% -17.26% -7.16%
Wholesale -0.84% -8.58% -17.67% -16.20% -16.42% -7.24%
Retail -2.02% -10.47% -20.08% -18.34% -18.55% -4.73%
Finance, Insurance, Real-Estate -1.55% -9.88% -17.43% -15.76% -15.88% -5.11%
Services -1.75% -9.71% -18.48% -17.22% -17.30% -6.25%
Public Administration -1.52% -7.86% -19.26% -15.72% -16.45% -8.54%
Energy -1.59% -16.32% -42.76% -41.84% -43.05% -35.79%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 03/24/2020)
1. AVI-SPL: $370MM covenant lite TLB (B2/B)

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

3. Championx: $537MM TL

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

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

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

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
Reynolds Group Hldgs Inc. (EUR) TLB E+325 02/05/2023
US Ecology Inc. (USD) TLB L+250 11/01/2026
Flying Fortress Inc. (USD) TLB L+175 10/30/2022
TDC A/S (EUR) TLB E+275 06/11/2025
IVC Acquisition LTD (EUR) TLB2 E+400 02/07/2026
Encapsys LLC (USD) TL L+350 11/07/2024
Ceridian HCM Holdings Inc. (USD) TLB L+250 04/30/2025
Veresen Midstream LP (CAD) TL 04/20/2024
G-III Apparel Group LTD (USD) TLB L+525 12/01/2022
API Technologies Corp. (USD) TL L+425 05/09/2026

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  95 bp (basis points), as of 03/24/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

Copyright 2020 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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