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North American Bond Research – March 6, 2020

Posted on March 6, 2020
HIGH YIELD BOND RESEARCH
March 6, 2020
Bond Markets

EUROPEAN AND US MARKETS TUMBLED AGAIN AFTER SPREAD OF VIRUS AND STATE OF EMERGENCY ARE SPREADING TO ITALY AND CALIFORNIA! THE US TREASURIES ARE APPROACHING ZERO. 10 year Treasury notes were down 22 basis points.  S&P -1.17%, Dow -0.98%, NASDAQ  -1.87%.
CORONA VIRUS UPDATE: CHINA TO DATE HAS HAD 100000+ CASES AND 3400+ 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
+   Charter Communications Operating LLC 4.8% 3/1/2050 +0.3%
  Petrobras Global Finance BV 6.85% 6/5/2115 +0.2%
  Charter Communications Operating LLC 5.05% 3/30/2029 +0.5%
–   CCO Hldg LLC 5.25% 9/30/2022 -0.0%
  Ford Motor Co. 5.291% 12/8/2046 -2.1%
  HCA Inc. 3.5% 9/1/2030 -0.7%
Charter Communications Operating LLC   4.8% 3/1/2050
Petrobras Global Finance BV   6.85% 6/5/2115
CCO Hldg LLC   5.25% 9/30/2022
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.38% -0.51% -0.21% 2.37% 0.80% 15.17%
Mining -0.45% -1.73% -5.74% -3.59% -7.54% -3.50%
Construction -0.09% -0.02% 0.34% 2.44% 1.70% 12.75%
Manufacturing -0.11% -0.19% -0.07% 2.49% 1.09% 9.94%
Transportion, Communication, Electric/Gas -0.12% 0.04% 0.87% 3.33% 1.74% 12.27%
Wholesale -0.14% -0.37% -1.87% 1.38% -0.36% 7.15%
Retail -0.18% -0.54% -0.57% 2.26% 0.47% 11.60%
Finance, Insurance, Real-Estate -0.10% 0.04% -0.06% 2.13% 1.03% 10.75%
Services -0.14% -0.16% -0.21% 2.05% 0.63% 9.40%
Public Administration -0.08% -0.22% 1.37% 3.91% 2.48% 13.37%
Energy -0.34% -1.56% -4.98% -2.10% -6.29% -1.56%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. CCO Hldg LLC Cco Hldg Capital Corp. (USD) 4.5% 8/15/2030 (03/05/2020): 1100MM Senior Unsecured Notes, Price at Issuance 102.5, Yielding 4.2%. 1. Whole Earth Brands (ACT II GLOBAL ACQUISTION CORP.):: $235 MM credit facilities: $50MM reolver; $185MM term A

2. Xperi Corp. : $1.1B seven-year secured covenant lite TLB

3. Thryv Inc. : $1.06B credit facilities: $200MM Revolver; $860MM TL

4. Tosca Services LLC: $325MM seven-year first-lien TL (B2/B)

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

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

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

8. Open Lending LLC: $225MM TLB

9. Lakeview Loan Servicing LLC: $550MM TLB

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

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
Technicolor (EUR) TLB E+300 12/31/2023
Cineworld Group PLC (USD) TLB L+250 09/20/2026
AP Exhaust Acquisition LLC (USD) TL PIK L+600 05/10/2025
Novacap SA (EUR) TLB E+350 06/22/2023
Cineworld Group PLC (USD) TLB L+225 02/28/2025
AMC Entertainment Hldg Inc. (USD) TLB L+300 04/22/2026
Philadelphia Energy Solutions (USD) TL L+800 02/11/2022
CIBT (USD) TLA L+375 06/01/2024
Tivity Health Inc. (USD) TLB L+525 03/08/2026
Station Casinos (USD) RC L+250 06/08/2021
EnergySolutions LLC (USD) TLB L+375 05/11/2025

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:

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  38 bp (basis points), as of 03/06/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
March 6, 2020
Bond Markets

EUROPEAN AND US MARKETS TUMBLED AGAIN AFTER SPREAD OF VIRUS AND STATE OF EMERGENCY ARE SPREADING TO ITALY AND CALIFORNIA! THE US TREASURIES ARE APPROACHING ZERO. 10 year Treasury notes were down 22 basis points.  S&P -1.17%, Dow -0.98%, NASDAQ  -1.87%.
CORONA VIRUS UPDATE: CHINA TO DATE HAS HAD 100000+ CASES AND 3400+ 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
+   CVS Health Corp. 5.05% 3/25/2048 +2.2%
  Morgan Stanley 2.699% 1/22/2031 +0.4%
  CVS Health Corp. 4.3% 3/25/2028 +0.2%
–   Bank of America Corp. 2.496% 2/13/2031 -0.6%
  General Electric Co. FLT% PERP (1) -2.3%
  Energy Transfer Operating, LP 5% 5/15/2050 -1.9%
Bank of America Corp.   2.496% 2/13/2031
CVS Health Corp.   5.05% 3/25/2048
General Electric Co.   FLT% PERP (1)
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.03% 0.56% 1.40% 4.58% 3.51% 6.06%
Mining 0.15% 0.34% 1.60% 3.86% 2.99% 12.99%
Construction 0.30% 0.92% 2.31% 4.50% 4.26% 12.60%
Manufacturing 0.13% 1.30% 2.56% 4.65% 4.34% 14.40%
Transportion, Communication, Electric/Gas 0.21% 1.36% 3.15% 5.80% 5.43% 18.24%
Wholesale 0.11% 1.17% 1.87% 4.20% 3.63% 15.23%
Retail 0.17% 1.32% 2.79% 4.82% 4.51% 15.83%
Finance, Insurance, Real-Estate 0.14% 1.03% 2.18% 3.91% 3.63% 11.97%
Services 0.13% 1.39% 2.71% 4.67% 4.40% 13.78%
Public Administration 0.18% 1.14% 1.94% 2.84% 2.79% 6.51%
Energy 0.16% 0.27% 1.59% 3.91% 2.79% 13.20%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Daimler Finance NA LLC (USD) 2.625% 3/10/2030 Reg S (03/05/2020): 450MM Senior Unsecured Notes, Price at Issuance 99.581, Yielding 2.67%.

2. Daimler Finance NA LLC (USD) 2.125% 3/10/2025 Reg S (03/05/2020): 450MM Senior Unsecured Notes, Price at Issuance 99.553, Yielding 2.22%.

3. Daimler Finance NA LLC (USD) 1.75% 3/10/2023 Reg S (03/05/2020): 1250MM Senior Unsecured Notes, Price at Issuance 99.814, Yielding 1.81%.

4. RioCan Realty Investments Partnership Ten LP (CAD) 2.361% 3/10/2027 (03/05/2020): 350MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.36%.

5. Canadian Pacific Railway LTD (CAD) 3.05% 3/9/2050 (03/05/2020): 300MM Senior Unsecured Notes, Price at Issuance 99.28, Yielding 3.09%.

6. Martin Marietta Materials (USD) 2.5% 3/15/2030 (03/05/2020): 500MM Senior Unsecured Notes, Price at Issuance 98.864, Yielding 2.63%.

7. Key Bank NA (USD) 1.25% 3/10/2023 (03/05/2020): 700MM Senior Unsecured Notes, Price at Issuance 99.953, Yielding 1.27%.

8. Prudential Financial Inc. (USD) 3% 3/10/2040 (03/05/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.746, Yielding 3.02%.

9. Prudential Financial Inc. (USD) 1.5% 3/10/2026 (03/05/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.572, Yielding 1.57%.

10. Prudential Financial Inc. (USD) 2.1% 3/10/2030 (03/05/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.749, Yielding 2.13%.

Additional Commentary

NEW ISSUANCE WATCH: on 03/06/2020 participants welcome a $700MM new corporate-bond offering by Key BankThe 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
Technicolor (EUR) TLB E+300 12/31/2023
Cineworld Group PLC (USD) TLB L+250 09/20/2026
AP Exhaust Acquisition LLC (USD) TL PIK L+600 05/10/2025
AMC Entertainment Hldg Inc. (USD) TLB L+300 04/22/2026
Philadelphia Energy Solutions (USD) TL L+800 02/11/2022
CIBT (USD) TLA L+375 06/01/2024

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 38 bp (basis points), as of 03/06/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

Copyright 2019 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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