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North American Bond Research – March 31, 2020

Posted on March 31, 2020
HIGH YIELD BOND RESEARCH
March 31, 2020
Bond Markets

STOCKS LOWER AS MORE STATES ANNOUNCE LOCKDOWNS. OIL CRASHES TO $20 A BARREL, ITS LOWEST LEVEL IN 18 YEARS. 10 Year Treasury notes were up 2.8 basis points. S&P -1.69%, Dow -1.84%, NASDAQ -0.95%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 855000+ CASES AND 42000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 185000+ CASES AND 3800+ 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
+   Ford Motor Credit Co. 5.113% 5/3/2029 +0.7%
  Frontier Communications Corp. 11% 9/15/2025 +1.0%
  Ford Motor Credit Co. 4.25% 9/20/2022 +0.1%
  Ford Motor Credit Co. 5.584% 3/18/2024 +3.7%
–   Ford Motor Co. 4.75% 1/15/2043 -5.1%
  Ford Motor Co. 4.346% 12/8/2026 -3.4%
  Tenet Healthcare Corp. 8.125% 4/1/2022 -4.2%
  Frontier Communications Corp. 10.5% 9/15/2022 -6.3%
Ford Motor Credit Co.   5.113% 5/3/2029
Ford Motor Co.   4.75% 1/15/2043
Ford Motor Co.   4.346% 12/8/2026
Ford Motor Credit Co.   3.336% 3/18/2021
Frontier Communications Corp.   11% 9/15/2025
Ford Motor Credit Co.   4.25% 9/20/2022
Ford Motor Credit Co.   5.584% 3/18/2024
Ford Motor Credit Co.   4.389% 1/8/2026
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 1.64% 8.12% -13.01% -12.78% -12.78% -2.10%
Mining 0.11% 2.20% -36.83% -40.89% -40.89% -33.60%
Construction 0.61% 0.63% -11.52% -10.01% -10.00% 0.13%
Manufacturing 1.25% 5.31% -11.83% -11.30% -11.27% -2.36%
Transportion, Communication, Electric/Gas 0.88% 7.22% -11.15% -10.33% -10.28% -0.61%
Wholesale 0.56% 2.37% -13.90% -13.86% -13.85% -4.53%
Retail 0.85% 4.23% -15.34% -15.33% -15.32% -2.62%
Finance, Insurance, Real-Estate 0.90% 5.06% -11.82% -11.28% -11.27% -1.74%
Services 1.04% 6.96% -11.53% -11.70% -11.69% -1.97%
Public Administration 1.84% 1.37% -16.44% -15.36% -15.30% -7.20%
Energy 0.37% 1.71% -37.44% -40.91% -40.92% -34.32%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 03/31/2020)
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
GGP Inc. (USD) TLA2 L+250 08/24/2023
Ascent Resources Marcellus LLC (USD) TL EXT L+650 12/31/2049
Parques Reunidos (EUR) TLB E+375 09/27/2026
J Crew Group Inc. (USD) TLB L+322 03/06/2021
WR Grace & Co. (USD) TLB1 L+175 04/03/2025
Phoenix Services LLC (USD) TL L+375 03/01/2025
WCA Waste Corp. (USD) TLB L+250 08/12/2023
Element Materials Technology Group (USD) TLB L+350 06/05/2024
Paysafe Group PLC (USD) TL L+350 01/02/2025
Syncreon Group BV (USD) TL 10/01/2024

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  146 bp (basis points), as of 03/31/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
March 31, 2020
Bond Markets

STOCKS LOWER AS MORE STATES ANNOUNCE LOCKDOWNS. OIL CRASHES TO $20 A BARREL, ITS LOWEST LEVEL IN 18 YEARS. 10 Year Treasury notes were up 2.8 basis points. S&P -1.69%, Dow -1.84%, NASDAQ -0.95%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 855000+ CASES AND 42000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 185000+ CASES AND 3800+ 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 +5.5%
  Goldman Sachs Group Inc. 3.5% 4/1/2025 +0.8%
  Morgan Stanley VAR% 4/1/2031 +2.2%
  Nvidia Corp. 3.5% 4/1/2050 +4.3%
  Nike Inc. 3.375% 3/27/2050 +0.2%
–   Oracle Corp. 2.5% 5/15/2022 -0.5%
  Occidental Petroleum Corp. 2.9% 8/15/2024 -1.1%
  Nike Inc. 3.25% 3/27/2040 -0.6%
  Lowe’s Companies Inc. 5.125% 4/15/2050 -0.9%
  Ford Motor Co. 4.75% 1/15/2043 -5.1%
Wells Fargo & Co.   5.013% 4/4/2051
Goldman Sachs Group Inc.   3.5% 4/1/2025
Morgan Stanley   VAR% 4/1/2031
Nvidia Corp.   3.5% 4/1/2050
Nike Inc.   3.375% 3/27/2050
Walt Disney Co.   4.7% 3/23/2050
Wells Fargo & Co.   VAR% 4/4/2031
Mastercard Inc.   3.85% 3/26/2050
Coca-Cola Co.   4.2% 3/25/2050
Oracle Corp.   1.9% 9/15/2021
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.33% 0.19% -7.09% -3.66% -3.67% 4.36%
Mining 0.11% 1.77% -17.00% -15.07% -15.06% -4.07%
Construction 0.55% -0.01% -9.70% -6.65% -6.60% 0.65%
Manufacturing 0.74% 4.33% -5.27% -2.14% -2.10% 6.46%
Transportion, Communication, Electric/Gas 0.66% 4.66% -7.58% -3.74% -3.67% 6.19%
Wholesale 0.42% 2.72% -6.61% -4.27% -4.25% 4.23%
Retail 0.73% 4.84% -5.66% -2.41% -2.36% 6.44%
Finance, Insurance, Real-Estate 0.51% 2.88% -4.83% -2.21% -2.20% 4.82%
Services 0.64% 4.46% -4.89% -1.74% -1.69% 7.15%
Public Administration 0.02% 0.05% 1.24% 3.03% 3.06% 5.57%
Energy 0.43% 2.57% -16.33% -14.40% -14.39% -4.64%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Enbridge Gas Distribution Inc (CAD) 2.9% 4/1/2030 (03/30/2020): 600MM Senior Unsecured Notes, Price at Issuance 99.888, Yielding 2.91%.

2. Enbridge Gas Distribution Inc (CAD) 3.65% 4/1/2050 (03/30/2020): 600MM Senior Unsecured Notes, Price at Issuance 99.783, Yielding 3.66%.

3. AFLAC Inc. (USD) 3.6% 4/1/2030 (03/30/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.742, Yielding 3.63%.

4. AEP Transmission Co. (USD) 3.65% 4/1/2050 (03/30/2020): 525MM Senior Unsecured Notes, Price at Issuance 99.964, Yielding 3.65%.

5. Oklahoma G&E Co. (USD) 3.25% 4/1/2030 (03/30/2020): 300MM Senior Unsecured Notes, Price at Issuance 99.949, Yielding 3.26%.

6. Wisconsin Power & Light (USD) 3.65% 4/1/2050 (03/30/2020): 350MM Senior Unsecured Notes, Price at Issuance 99.873, Yielding 3.66%.

7. BAT Cap Corp. (USD) 4.906% 4/2/2030 (03/30/2020): 1000MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.91%.

8. BAT Cap Corp. (USD) 5.282% 4/2/2050 (03/30/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.28%.

9. BAT Cap Corp. (USD) 4.7% 4/2/2027 (03/30/2020): 900MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.7%.

10. TJX Cos. Inc. (USD) 3.75% 4/15/2027 (03/30/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.931, Yielding 3.76%.

Additional Commentary

NEW ISSUANCE WATCH: on 03/31/2020 participants welcome a $750MM new corporate-bond offering by TJX CoThe 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
GGP Inc. (USD) TLA2 L+250 08/24/2023
Ascent Resources Marcellus LLC (USD) TL EXT L+650 12/31/2049
Parques Reunidos (EUR) TLB E+375 09/27/2026
J Crew Group Inc. (USD) TLB L+322 03/06/2021
WR Grace & Co. (USD) TLB1 L+175 04/03/2025
Phoenix Services LLC (USD) TL L+375 03/01/2025
WCA Waste Corp. (USD) TLB L+250 08/12/2023
Element Materials Technology Group (USD) TLB L+350 06/05/2024
Paysafe Group PLC (USD) TL L+350 01/02/2025
Syncreon Group BV (USD) TL 10/01/2024

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 146 bp (basis points), as of 03/31/2020
  • 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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