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North American Bond Research – March 4, 2020

Posted on March 4, 2020

HIGH YIELD BOND RESEARCH

March 4, 2020

Bond Markets

WORLD MARKETS EUROPEAN AND US MARKETS SOARED AGAIN AS CORONAVIRUS IS SLOWING IN CHINA BUT SPREADING INTERNATIONALLY. 10 year Treasury notes were down 1.8 basis points. S&P +4.25%, Dow +4.53%, NASDAQ +3.85%.

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CORONA VIRUS UPDATE: CHINA TO DATE HAS HAD 94000+ CASES AND 3200+ 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

+	HCA Inc. 3.5% 9/1/2030	+ 1.5%
	Petrobras Global Finance BV 6.85% 6/5/2115	+ 1.7%
	Charter Communications Operating LLC 4.8% 3/1/2050	+ 0.9%
–	CNO Financial Group 5.25% 5/30/2029	-0.2%
	CNO Financial Group 5.25% 5/30/2025	-0.2%
	Intelsat Luxembourg SA 8.125% 6/1/2023	-2.6%

HCA Inc.   3.5% 9/1/2030
Petrobras Global Finance BV   6.85% 6/5/2115
Charter Communications Operating LLC   4.8% 3/1/2050

Industry Returns Tracker

Industry	Past Day	Past Week	Past Month	Past Quarter	YTD	Past Year
Agriculture, Forestry, Fishing	0.44%	-1.42%	-0.53%	2.31%	0.60%	15.16%
Mining	0.40%	-4.58%	-6.51%	-3.39%	-8.71%	-4.39%
Construction	0.16%	-0.66%	0.22%	2.43%	1.49%	12.71%
Manufacturing	0.29%	-0.90%	-0.04%	2.57%	0.89%	9.85%
Transportion, Communication, Electric/Gas	0.31%	-0.88%	0.60%	3.16%	1.31%	10.99%
Wholesale	0.27%	-1.16%	-1.57%	2.13%	0.18%	7.02%
Retail	0.24%	-1.13%	-0.67%	2.12%	0.19%	11.11%
Finance, Insurance, Real-Estate	0.34%	-0.72%	-0.30%	1.73%	0.60%	10.10%
Services	0.23%	-1.01%	-0.38%	1.82%	0.28%	9.14%
Public Administration	0.70%	-0.89%	1.07%	3.92%	2.24%	12.56%
Energy	0.45%	-4.18%	-5.92%	-2.12%	-7.45%	-2.43%

Total returns (non-annualized) by rating, market weighted.

New Issues	Forward Calendar
1. Science Applications (USD) 4.875% 4/1/2028 (03/04/2020): 400MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.88%. (None Current 03/04/2020)	1. Service Logic: $140MM bank debt: $40MM TL; $100MM DD TL 2. Whole Earth Brands (ACT II GLOBAL ACQUISTION CORP.):: $235 MM credit facilities: $50MM reolver; $185MM term A 3. Lakeview Loan Servicing LLC: $550MM TLB 4. Innovate Xcessories & Services LLC: $695MM credit facilities: $75MM revolver; $620MM TL(B2/B) 5. Grosvenor Capital Management: $344MM TLB 6. 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 7. Duff & Phelps: $1.75B credit facilities: $200MM revolver; $1.55B TLB 8. Cornerstore Ondemand Inc.: $1.135MM senior secured credit facilities: $150MM revolver; $985MM TLB 9. CJ Foods Inc.: $285MM TLB 10. Cincinnati Bell Inc.: $1.12B senior secured credit facilities: $200M revolver; $920MM TL

New Issues

Forward Calendar

1. Science Applications (USD) 4.875% 4/1/2028 (03/04/2020): 400MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.88%.

(None Current 03/04/2020)

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

2. Whole Earth Brands (ACT II GLOBAL ACQUISTION CORP.):: $235 MM credit facilities: $50MM reolver; $185MM term A

3. Lakeview Loan Servicing LLC: $550MM TLB

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

5. Grosvenor Capital Management: $344MM TLB

6. 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

7. Duff & Phelps: $1.75B credit facilities: $200MM revolver; $1.55B TLB

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

9. CJ Foods Inc.: $285MM TLB

10. Cincinnati Bell Inc.: $1.12B senior secured credit facilities: $200M revolver; $920MM 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 Credit Default Swaps (CDS)	Top Narrowing Credit Default Swaps (CDS)
Rite Aid Corp. (5Y Sen USD MR14) Weatherford International LTD (5Y Sen USD MR14) Hertz Corp. (5Y Sen USD CR14)	Ghana, Republic of (5Y Sen USD CR14) Road King Infrastructure LTD (5Y Sen USD CR14) Road King Infrastructure LTD (5Y Sen USD MR14)

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 15 bp (basis points), as of 02/28/2020
Net negative capital flows into high-yield ETFs & mutual funds

INVESTMENT GRADE BOND RESEARCH

March 4, 2020

Bond Markets

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CORONA VIRUS UPDATE: CHINA TO DATE HAS HAD 94000+ CASES AND 3200+ 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

+	McDonald’s Corp. 3.625% 9/1/2049	+0.4%
	CVS Health Corp. 5.05% 3/25/2048	+0.1%
	BP Capital Markets PLC 3% 2/24/2050	+0.5%
–	Southern California Edison Co. 3.65% 2/1/2050	-0.3%
	Cigna Corp. 4.9% 12/15/2048	-1.8%
	AT&T Inc. 4.5% 3/9/2048	-0.1%

Southern California Edison Co.   3.65% 2/1/2050
McDonald’s Corp.   3.625% 9/1/2049
Cigna Corp.   4.9% 12/15/2048

Industry Returns Tracker

Industry	Past Day	Past Week	Past Month	Past Quarter	YTD	Past Year
Agriculture, Forestry, Fishing	0.29%	0.17%	0.99%	4.10%	3.20%	6.37%
Mining	0.45%	-0.66%	0.62%	2.97%	2.37%	12.47%
Construction	0.45%	0.18%	1.25%	3.51%	3.39%	11.49%
Manufacturing	0.45%	0.69%	1.71%	3.84%	3.82%	13.93%
Transportion, Communication, Electric/Gas	0.49%	0.61%	2.05%	4.78%	4.80%	17.84%
Wholesale	0.45%	0.44%	1.51%	3.86%	3.52%	14.87%
Retail	0.49%	0.72%	1.86%	3.91%	3.98%	15.32%
Finance, Insurance, Real-Estate	0.34%	0.63%	1.49%	3.29%	3.22%	11.53%
Services	0.45%	0.84%	1.91%	3.98%	4.02%	13.81%
Public Administration	0.34%	1.00%	1.40%	2.40%	2.41%	6.38%
Energy	0.42%	-0.71%	0.72%	3.13%	2.32%	12.83%

Total returns (non-annualized) by rating, market weighted.

New Issues	New Issues [Continued]
1. Texas Instruments Inc. (USD) 1.375% 3/12/2025 (03/03/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.851, Yielding 1.41%. 2. Entergy Louisiana LLC (USD) 2.9% 3/15/2051 (03/03/2020): 350MM Secured Notes, Price at Issuance 99.755, Yielding 2.91%. 3. Canadian Pacific Railway Co. (USD) 2.05% 3/5/2030 (03/03/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.802, Yielding 2.07%. 4. Sherwin Williams Co. (USD) 2.3% 5/15/2030 (03/03/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.979, Yielding 2.3%. 5. Sherwin Williams Co. (USD) 3.3% 5/15/2050 (03/03/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.823, Yielding 3.31%. 6. McDonald’s Corp. (USD) 1.45% 9/1/2025 (03/03/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.816, Yielding 1.48%. 7. McDonald’s Corp. (USD) 2.125% 3/1/2030 (03/03/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.946, Yielding 2.13%. 8. American Electric Power Co. Inc. (USD) 2.3% 3/1/2030 (03/03/2020): 400MM Senior Unsecured Notes, Price at Issuance 99.956, Yielding 2.3%. 9. American Electric Power Co. Inc. (USD) 3.25% 3/1/2050 (03/03/2020): 400MM Senior Unsecured Notes, Price at Issuance 99.829, Yielding 3.26%. 10. eBay Inc. (USD) 1.9% 3/11/2025 (03/04/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.782, Yielding 1.95%.

New Issues

New Issues [Continued]

1. Texas Instruments Inc. (USD) 1.375% 3/12/2025 (03/03/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.851, Yielding 1.41%.

2. Entergy Louisiana LLC (USD) 2.9% 3/15/2051 (03/03/2020): 350MM Secured Notes, Price at Issuance 99.755, Yielding 2.91%.

3. Canadian Pacific Railway Co. (USD) 2.05% 3/5/2030 (03/03/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.802, Yielding 2.07%.

4. Sherwin Williams Co. (USD) 2.3% 5/15/2030 (03/03/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.979, Yielding 2.3%.

5. Sherwin Williams Co. (USD) 3.3% 5/15/2050 (03/03/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.823, Yielding 3.31%.

6. McDonald’s Corp. (USD) 1.45% 9/1/2025 (03/03/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.816, Yielding 1.48%.

7. McDonald’s Corp. (USD) 2.125% 3/1/2030 (03/03/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.946, Yielding 2.13%.

8. American Electric Power Co. Inc. (USD) 2.3% 3/1/2030 (03/03/2020): 400MM Senior Unsecured Notes, Price at Issuance 99.956, Yielding 2.3%.

9. American Electric Power Co. Inc. (USD) 3.25% 3/1/2050 (03/03/2020): 400MM Senior Unsecured Notes, Price at Issuance 99.829, Yielding 3.26%.

10. eBay Inc. (USD) 1.9% 3/11/2025 (03/04/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.782, Yielding 1.95%.

Additional Commentary

NEW ISSUANCE WATCH: on 02/202020 participants welcome a $750MM new corporate-bond offering by Citrix Systems. 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
Arvos Holding (EUR) TLB2 E+450 08/29/2021 Novacap SA (EUR) TLB E+350 06/22/2023 Mattress Firm (USD) TL EXIT 11/21/2022 Unifrax Corp. (EUR) TLB E+375 12/14/2025 Orion EngineeRed Carbons Hldgs GmbH (USD) TLB L+200 07/25/2024	Advanced Energy Industries Inc. (USD) TLA 09/10/2024 Playa Resorts Holding BV (USD) TLB L+325 04/27/2024 Swissport Financing SA R.L. (EUR) TLB E+475 08/09/2024 Alorica (USD) TL L+375 06/30/2022 ConvergeOne LLC (USD) TL L+500 01/04/2026 PowerTeam Services LLC (USD) TL L+325 03/05/2025

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:

TED spread held below 15 bp (basis points), as of 02/28/2020
Net positive capital flows into high-yield ETFs & mutual funds

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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