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North American Bond Research – March 26, 2020

Posted on March 26, 2020
HIGH YIELD BOND RESEARCH
March 26, 2020
Bond Markets

MARKETS WERE UP AS THE SENATE FINALLY PASSED THE STIMULUS PACKAGE. 3 MILLION PLUS APPLIED FOR UNEMPLOYMENT. 10000+ NEW CORONAVIRISES CASES TODAY! 10 Year Treasury notes were down 4.7 basis points. S&P +6.24%, Dow +6.38%, NASDAQ +5.60%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 526000+ CASES AND 24000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 82000+ CASES AND 1200+ 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
+   Intl Lease Finance Corp. 5.875% 8/15/2022 +13.7%
  Ford Motor Credit Co. 5.113% 5/3/2029 +4.2%
  Sprint Nextel Corp. 7.875% 9/15/2023 +9.9%
  Frontier Communications Corp. 10.5% 9/15/2022 +14.0%
  Ford Motor Credit Co. 2.979% 8/3/2022 +8.4%
–   Ford Motor Co. 4.346% 12/8/2026 -3.6%
  BlackRock Inc. 2.4% 4/30/2030 -1.9%
  Ford Motor Credit Co. 4.687% 6/9/2025 -1.3%
  Charter Communications Operating LLC 4.8% 3/1/2050 -1.6%
  Diamond Offshore Drilling 7.875% 8/15/2025 -5.3%
Intl Lease Finance Corp.   5.875% 8/15/2022
Ford Motor Co.   4.346% 12/8/2026
BlackRock Inc.   2.4% 4/30/2030
Ford Motor Credit Co.   5.113% 5/3/2029
Sprint Nextel Corp.   7.875% 9/15/2023
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.74% -1.44% -19.78% -18.06% -18.17% -8.33%
Mining 1.33% -11.14% -41.12% -42.26% -42.22% -34.96%
Construction -0.00% -5.64% -13.99% -11.69% -11.74% -0.48%
Manufacturing 1.41% -5.58% -16.60% -14.88% -14.85% -5.51%
Transportion, Communication, Electric/Gas 2.02% -4.51% -16.73% -14.94% -14.98% -5.21%
Wholesale 0.30% -5.02% -17.00% -15.93% -16.12% -6.94%
Retail 1.06% -8.31% -19.01% -17.87% -18.04% -5.38%
Finance, Insurance, Real-Estate 1.22% -6.32% -16.30% -14.86% -14.95% -5.05%
Services 1.46% -5.84% -17.26% -16.14% -16.23% -5.47%
Public Administration -3.02% -6.62% -22.04% -19.37% -19.61% -11.67%
Energy 0.97% -11.09% -41.23% -42.00% -42.15% -35.60%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 03/26/2020)
1. AVI-SPL: $370MM covenant lite TLB (B2/B)

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

3. CJ Foods Inc.: $285MM TLB

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: No new issues  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
Ascent Resources Marcellus LLC (USD) TL EXT L+650 12/31/2049
GGP Inc. (USD) TLA2 L+250 08/24/2023
Arbor Pharmaceuticals LLC (USD) TLB L+500 07/05/2023
Epic Y-Grade (USD) TLB L+600 06/13/2024
J Crew Group Inc. (USD) TLB L+322 03/06/2021
Vistra Group LTD (EUR) TL L+325 10/26/2022
Multi-Color Corp. (EUR) TLB E+500 07/02/2026
Coty Inc. (EUR) TLB E+250 04/05/2025
Maverick Purchaser Sub, LLC (USD) TLB L+400 01/24/2027
BVI Medical Inc. (EUR) TLB E+350 02/28/2026

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  123.87 bp (basis points), as of 03/25/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
March 26, 2020
Bond Markets

MARKETS WERE UP AS THE SENATE FINALLY PASSED THE STIMULUS PACKAGE. 3 MILLION PLUS APPLIED FOR UNEMPLOYMENT. 10000+ NEW CORONAVIRISES CASES TODAY! 10 Year Treasury notes were down 4.7 basis points. S&P +6.24%, Dow +6.38%, NASDAQ +5.60%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 526000+ CASES AND 24000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 82000+ CASES AND 1200+ 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
+   Lowe’s Companies Inc. 5.125% 4/15/2050 +3.7%
  Coca-Cola Co. 4.2% 3/25/2050 +1.0%
  Intel Corp. 4.75% 3/25/2050 +1.6%
  Comcast Corp. 3.3% 4/1/2027 +0.6%
  Wal-Mart Stores Inc. 3.7% 6/26/2028 +1.7%
–   Wells Fargo & Co. 5.013% 4/4/2051 -3.0%
  CVS Health Corp. 5.05% 3/25/2048 -2.7%
  Verizon Communications Inc. 4% 3/22/2050 -0.8%
  Intel Corp. 4.95% 3/25/2060 -2.0%
  Wells Fargo & Co. 2.879% 10/30/2030 -1.7%
Wells Fargo & Co.   5.013% 4/4/2051
Lowe’s Companies Inc.   5.125% 4/15/2050
CVS Health Corp.   5.05% 3/25/2048
Coca-Cola Co.   4.2% 3/25/2050
Intel Corp.   4.75% 3/25/2050
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.07% -2.74% -8.45% -5.51% -5.02% 3.73%
Mining 0.48% -6.75% -20.05% -17.56% -17.70% -5.85%
Construction -0.34% -6.10% -13.01% -9.98% -9.99% -1.88%
Manufacturing 0.82% -1.90% -7.74% -4.76% -4.89% 3.55%
Transportion, Communication, Electric/Gas 0.71% -1.94% -11.49% -7.81% -7.85% 1.94%
Wholesale 0.14% -3.84% -7.84% -5.32% -5.45% 2.63%
Retail 0.88% -1.72% -8.67% -5.62% -5.72% 3.07%
Finance, Insurance, Real-Estate 0.67% -1.81% -6.40% -3.92% -4.07% 2.83%
Services 1.17% -1.10% -7.66% -4.54% -4.65% 4.93%
Public Administration -0.22% 0.34% 1.46% 3.04% 2.93% 5.73%
Energy 0.60% -6.17% -20.22% -17.62% -17.72% -7.61%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. 3M Co. (USD) 3.7% 4/15/2050 (03/25/2020): 650MM Senior Unsecured Notes, Price at Issuance 99.656, Yielding 3.72%.

2. 3M Co. (USD) 3.05% 4/15/2030 (03/25/2020): 600MM Senior Unsecured Notes, Price at Issuance 99.681, Yielding 3.09%.

3. Pfizer Inc. (USD) 2.625% 4/1/2030 (03/25/2020): 1250MM Senior Unsecured Notes, Price at Issuance 99.65, Yielding 2.67%.

4. O’Reilly Automotive Inc. (USD) 4.2% 4/1/2030 (03/25/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.959, Yielding 4.2%.

5. Stanford Health Care (USD) 3.31% 8/15/2030 (03/25/2020): 300MM Unsecured Notes, Price at Issuance 100, Yielding 3.31%.

6. Berkshire Hathaway Energy Co. (USD) 3.7% 7/15/2030 144A (03/25/2020): 1100MM Senior Unsecured Notes, Price at Issuance 99.984, Yielding 3.7%.

7. Berkshire Hathaway Energy Co. (USD) 4.25% 10/15/2050 144A (03/25/2020): 900MM Senior Unsecured Notes, Price at Issuance 99.455, Yielding 4.28%.

8. Berkshire Hathaway Energy Co. (USD) 3.7% 7/15/2030 Reg S (03/25/2020): 1100MM Senior Unsecured Notes, Price at Issuance 99.984, Yielding 3.7%.

9. Berkshire Hathaway Energy Co. (USD) 4.25% 10/15/2050 Reg S (03/25/2020): 900MM Senior Unsecured Notes, Price at Issuance 99.455, Yielding 4.28%.

10. McDonald’s Corp. (USD) 4.2% 4/1/2050 (03/25/2020): 750MM Senior Unsecured Notes, Price at Issuance 98.855, Yielding 4.27%.

Additional Commentary

NEW ISSUANCE WATCH: on 03/26/2020 participants welcome an $300MM new corporate-bond offering by Stanford HealthThe 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
Ascent Resources Marcellus LLC (USD) TL EXT L+650 12/31/2049
GGP Inc. (USD) TLA2 L+250 08/24/2023
Arbor Pharmaceuticals LLC (USD) TLB L+500 07/05/2023
Epic Y-Grade (USD) TLB L+600 06/13/2024
J Crew Group Inc. (USD) TLB L+322 03/06/2021
Vistra Group LTD (EUR) TL L+325 10/26/2022
Multi-Color Corp. (EUR) TLB E+500 07/02/2026
Coty Inc. (EUR) TLB E+250 04/05/2025
Maverick Purchaser Sub, LLC (USD) TLB L+400 01/24/2027
BVI Medical Inc. (EUR) TLB E+350 02/28/2026

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 123.87 bp (basis points), as of 03/25/2020
  • Net positive 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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