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North American Bond Research – March 30, 2020

Posted on March 30, 2020
HIGH YIELD BOND RESEARCH
March 30, 2020
Bond Markets

STOCKS MUCH HIGHER AS MARKETS SEE HOPE THAT THE ACCELERATION OF CASES ARE SLOWING DOWN. AID AND RELIEF ARE STARTING TO FLOW THROUGHOUT THE COUNTRY.   10 Year Treasury notes were down 7.9 basis points. S&P +3.35%, Dow +3.19%, NASDAQ +3.62%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 780000+ CASES AND 37000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 160000+ CASES AND 3000+ DEATHS.    Among high-grade bonds showing topmost price gains at appreciable volumes traded, Ford Motor Co (USD) 7.4% 11/1/2046 made analysts’ ‘Conviction Buy’ list. (See the chart below for Ford Motor Co bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Expedia Inc. 3.8% 2/15/2028 (1) +4.1%
  Micron Technology Inc. 4.663% 2/15/2030 +3.3%
  General Motors Co. 5.2% 4/1/2045 +0.1%
  Ford Motor Credit Co. 5.113% 5/3/2029 +7.5%
  Vodafone Group PLC 7% 4/4/2079 +3.2%
–   Cenovus Energy Inc. 4.25% 4/15/2027 -7.1%
  Ford Motor Co. 4.75% 1/15/2043 -6.2%
  Ford Motor Co. 5.291% 12/8/2046 -6.8%
  Teva Pharmaceuticals Fin BV 6% 4/15/2024 -0.3%
  Ball Corp. 4% 11/15/2023 -0.4%
Expedia Inc.   3.8% 2/15/2028 (1)
Micron Technology Inc.   4.663% 2/15/2030
General Motors Co.   5.2% 4/1/2045
Ford Motor Credit Co.   5.113% 5/3/2029
Vodafone Group PLC   7% 4/4/2079
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 3.00% 7.05% -14.26% -13.14% -13.23% -2.97%
Mining 1.35% 0.50% -36.82% -39.33% -39.37% -32.32%
Construction 0.69% -0.87% -12.27% -10.39% -10.39% 0.11%
Manufacturing 2.15% 3.49% -13.31% -12.09% -12.08% -2.94%
Transportion, Communication, Electric/Gas 1.55% 5.03% -12.43% -11.25% -11.19% -1.74%
Wholesale 1.36% 1.64% -14.39% -13.95% -14.09% -6.00%
Retail 1.52% 1.82% -15.47% -15.03% -15.02% -2.84%
Finance, Insurance, Real-Estate 1.43% 3.14% -12.52% -11.50% -11.52% -1.50%
Services 1.98% 3.67% -12.85% -12.41% -12.41% -2.38%
Public Administration 1.64% -1.96% -18.99% -16.86% -16.84% -8.75%
Energy 1.52% 0.25% -37.37% -39.73% -39.78% -33.52%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 03/30/2020)
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
AVSC Holding Corp. (USD) TLB L+450 09/19/2026
Jordan Healthcare Hldg Inc. (USD) TL L+500 05/15/2025
Phoenix Services LLC (USD) TL L+375 03/01/2025
Arbor Pharmaceuticals LLC (USD) TLB L+500 07/05/2023
Arvos Holding (EUR) TLB2 E+450 08/29/2021
WR Grace & Co. (USD) TLB1 L+175 04/03/2025
Athenahealth Inc. (USD) TLB L+450 02/11/2026
Nautilus Power (USD) TLB L+425 05/16/2024
MORSCO Inc. (USD) TL L+700 10/31/2023
JDA Software Group Inc. (USD) TLB L+275 10/12/2023

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  146 bp (basis points), as of 03/30/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
March 30, 2020
Bond Markets

STOCKS MUCH HIGHER AS MARKETS SEE HOPE THAT THE ACCELERATION OF CASES ARE SLOWING DOWN. AID AND RELIEF ARE STARTING TO FLOW THROUGHOUT THE COUNTRY.   10 Year Treasury notes were down 7.9 basis points. S&P +3.35%, Dow +3.19%, NASDAQ +3.62%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 780000+ CASES AND 37000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 160000+ CASES AND 3000+ DEATHS. Among high-grade bonds showing topmost price gains at appreciable volumes traded, Baker Hughes Inc. (USD) 4.08% 12/15/2047 made analysts’ ‘Conviction Buy’ list. (See the chart below for Baker Hughes Inc. bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Wells Fargo & Co. 5.013% 4/4/2051 +3.4%
  Morgan Stanley VAR% 4/1/2031 +1.5%
  Consolidated Edison Co. of NY Inc. 3.95% 4/1/2050 +1.0%
  Procter & Gamble Co. 3.6% 3/25/2050 +3.8%
  Morgan Stanley 5.597% 3/24/2051 +2.6%
–   Nike Inc. 2.85% 3/27/2030 -0.9%
  Comcast Corp. 3.4% 4/1/2030 -0.0%
  HSBC Hldg PLC 4.95% 3/31/2030 -0.4%
  Exxon Mobil Corp. 3.482% 3/19/2030 -2.4%
  Coca-Cola Co. 4.2% 3/25/2050 -1.2%
Wells Fargo & Co.   5.013% 4/4/2051
Morgan Stanley   VAR% 4/1/2031
Consolidated Edison Co. of NY Inc.   3.95% 4/1/2050
Procter & Gamble Co.   3.6% 3/25/2050
Morgan Stanley   5.597% 3/24/2051
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.20% -0.69% -7.95% -5.14% -4.56% 3.80%
Mining 1.03% 0.52% -17.25% -15.31% -15.23% -4.47%
Construction 0.65% -0.65% -8.68% -5.84% -5.69% 1.67%
Manufacturing 1.05% 3.31% -5.71% -2.97% -2.84% 5.71%
Transportion, Communication, Electric/Gas 1.35% 3.76% -8.21% -4.77% -4.56% 5.27%
Wholesale 0.94% 2.10% -6.65% -4.55% -4.51% 3.86%
Retail 1.02% 3.58% -6.10% -3.23% -3.10% 5.51%
Finance, Insurance, Real-Estate 0.68% 2.56% -5.19% -2.78% -2.74% 4.28%
Services 1.01% 3.07% -5.17% -2.32% -2.18% 6.66%
Public Administration 0.17% 0.25% 1.47% 3.18% 3.18% 5.72%
Energy 1.06% 1.39% -17.19% -15.22% -15.14% -5.64%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Bright Real Estate Group Co. LTD (CNY) 3.65% 3/27/2023 (03/30/2020): 750MM Unsecured Notes, Price at Issuance 100, Yielding 3.65%.
Additional Commentary

NEW ISSUANCE WATCH: on 03/30/2020 participants welcome a $750MM new corporate-bond offering by Bright Real EstateThe 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
AVSC Holding Corp. (USD) TLB L+450 09/19/2026
Jordan Healthcare Hldg Inc. (USD) TL L+500 05/15/2025
Phoenix Services LLC (USD) TL L+375 03/01/2025
Arbor Pharmaceuticals LLC (USD) TLB L+500 07/05/2023
Arvos Holding (EUR) TLB2 E+450 08/29/2021
WR Grace & Co. (USD) TLB1 L+175 04/03/2025
Athenahealth Inc. (USD) TLB L+450 02/11/2026
Nautilus Power (USD) TLB L+425 05/16/2024
MORSCO Inc. (USD) TL L+700 10/31/2023
JDA Software Group Inc. (USD) TLB L+275 10/12/2023

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 146 bp (basis points), as of 03/30/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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