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North American Bond Research – May 1, 2020

Posted on May 1, 2020
HIGH YIELD BOND RESEARCH
May 1, 2020
Bond Markets

TRUMP THREATENING TO LEVY TARIFFS AGAINST CHINA. AMAZON’S REVENUES WERE UP, BUT ITS PROFITS WERE WAY DOWN. FINANCIAL FALLOUT FROM COVID-19 IS SPREADING  WIDELY. 10 Year Treasury notes were up 2 basis points. S&P -2.81%, Dow -2.55%, NASDAQ -3.83%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 3.33 MILLION+ CASES AND 240000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 1.12 MILLION+ CASES AND 65500+ DEATHS.  Among high-grade bonds showing topmost price gains at appreciable volumes traded, Ferrellgas Partners LP (USD) 8.625% 6/15/2020 made analysts’ ‘Conviction Buy’ list. (See the chart below for Ferrellgas Partners LP bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Occidental Petroleum Corp. 2.9% 8/15/2024 +0.7%
  Southwestern Energy Co. 7.5% 4/1/2026 +0.1%
  Chesapeake Energy Corp. 11.5% 1/1/2025 Reg S +20.0%
  EQT Corp. 7% 2/1/2030 +0.4%
  Southwestern Energy Co. 4.95% 1/23/2025 +0.7%
–   Ford Motor Co. 9% 4/22/2025 -1.4%
  MGM Resorts Intl 6.75% 5/1/2025 -2.4%
  Macy’s Retail Hldg Inc. 3.625% 6/1/2024 -0.5%
  Ford Motor Co. 9.625% 4/22/2030 -2.4%
  Ford Motor Co. 8.5% 4/21/2023 -1.1%
Ford Motor Co.   9% 4/22/2025
MGM Resorts Intl   6.75% 5/1/2025
Ford Motor Co.   9.625% 4/22/2030
Macy’s Retail Hldg Inc.   3.625% 6/1/2024
Ford Motor Co.   8.5% 4/21/2023
Hertz Corp.   6.25% 10/15/2022
Occidental Petroleum Corp.   2.9% 8/15/2024
Southwestern Energy Co.   7.5% 4/1/2026
Antero Resources Finance Corp.   5.375% 11/1/2021
Diamondback Energy Inc.   3.5% 12/1/2029
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.65% 0.55% 9.04% -6.04% -5.08% 5.50%
Mining 1.68% 2.69% 17.82% -29.52% -29.85% -22.30%
Construction 0.19% 0.56% 4.46% -7.77% -6.32% 2.62%
Manufacturing 0.07% -0.12% 5.06% -7.70% -6.72% 0.24%
Transportion, Communication, Electric/Gas 0.23% 0.12% 7.66% -4.92% -4.35% 3.03%
Wholesale 0.32% 0.58% 10.41% -10.38% -9.26% -2.82%
Retail 0.21% 0.51% 4.35% -10.67% -9.87% -2.05%
Finance, Insurance, Real-Estate 0.56% 0.51% 4.14% -9.11% -8.14% -0.71%
Services 0.17% -0.43% 4.82% -7.83% -7.24% 1.00%
Public Administration 0.13% -0.31% 11.18% -6.74% -5.79% 2.75%
Energy 1.80% 3.38% 22.49% -27.63% -27.79% -21.50%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Vail Resorts Inc. (USD) 6.25% 5/15/2025 144A (04/30/2020): 600MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.25%.

2. HanesBrands Inc. (USD) 5.375% 5/15/2025 144A (04/30/2020): 700MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.38%.

3. HanesBrands Inc. (USD) 5.375% 5/15/2025 Reg S (04/30/2020): 700MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.38%.

4. Tempo Acquisition LLC/FI (USD) 5.75% 6/1/2025 144A (04/30/2020): 300MM First Lien Notes, Price at Issuance 100, Yielding 5.75%.

1. Open Lending LLC: $225MM TLB

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

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

4. T-Mobile USA Inc.: $8B senior secured credit facilities: $4B five-year revolver; $4B seven-year cove-lite TL

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

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

Additional Commentary

NEW ISSUANCE WATCH: Vail Resorts issued $600 MM in notes.
Top Widening Loans Top Narrowing Loans
Nets Hldgs AS (NOK) TLB1N L+400 02/06/2025
USIC Holdings Inc. (USD) TL L+325 12/09/2023
Savage Enterprises LLC (USD) TLB L+300 08/02/2025
Monitronics Intl. Inc. (USD) TL EXIT L+500 07/03/2024
SMG (USD) Bridge TL L+250 01/23/2025
Hamilton Holdco LLC (USD) TLB L+200 01/02/2027
Internet Brands Inc. (USD) TL2 L+750 08/16/2025
Orion EngineeRed Carbons Hldgs GmbH (USD) TLB L+200 07/25/2024
Hayward Ind Inc (USD) TLB L+350 08/04/2024
Beteiligungsgesellschaft Fuer Pensionsgelder (EUR) TLB E+350 06/14/2024

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 46 bp (basis points), as of 05/01/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
May 1, 2020
Bond Markets

TRUMP THREATENING TO LEVY TARIFFS AGAINST CHINA. AMAZON’S REVENUES WERE UP, BUT ITS PROFITS WERE WAY DOWN. FINANCIAL FALLOUT FROM COVID-19 IS SPREADING  WIDELY. 10 Year Treasury notes were up 2 basis points. S&P -2.81%, Dow -2.55%, NASDAQ -3.83%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 3.2 MILLION+ CASES AND 227000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 1.1 MILLION+ CASES AND 64000+ DEATHS.  Among high-grade bonds showing topmost price gains at appreciable volumes traded, United Parcel Service Inc. (USD) 4.875% 11/15/2040 made analysts’ ‘Conviction Buy’ list. (See the chart below for United Parcel Service Inc.  bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Public Storage 3.385% 5/1/2029 +1.9%
  Brookfield Finance Inc. 4.7% 9/20/2047 +0.6%
  Wells Fargo & Co. VAR% 4/4/2031 +0.2%
  Sanofi-Aventis 4% 3/29/2021 +0.1%
  Cisco Systems Inc. 2.2% 2/28/2021 +0.1%
–   Southwest Airlines Co. 1.25% 5/1/2025 -3.2%
  Wells Fargo & Co. 3.068% 4/30/2041 -1.4%
  General Electric Co. 4.35% 5/1/2050 -1.7%
  Citigroup Inc. 4.412% 3/31/2031 -0.1%
  Coca-Cola Co. 2.6% 6/1/2050 -0.5%
Southwest Airlines Co.   1.25% 5/1/2025
Wells Fargo & Co.   3.068% 4/30/2041
General Electric Co.   4.35% 5/1/2050
Citigroup Inc.   4.412% 3/31/2031
Coca-Cola Co.   2.6% 6/1/2050
Boeing Co.   2.3% 8/1/2021
Coca-Cola Co.   1.65% 6/1/2030
Goldman Sachs Group Inc.   3.5% 4/1/2025
Public Storage   3.385% 5/1/2029
Marriott Intl Inc.   5.75% 5/1/2025
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.15% -0.00% 5.39% -1.98% 0.44% 5.04%
Mining 0.37% 1.08% 9.00% -6.29% -4.66% 3.13%
Construction -0.03% 1.18% 6.88% -3.01% -0.62% 5.93%
Manufacturing -0.05% 0.03% 4.60% 0.28% 2.32% 10.16%
Transportion, Communication, Electric/Gas -0.10% 0.05% 7.23% 0.25% 2.88% 12.03%
Wholesale 0.05% 0.44% 4.53% -2.12% -0.27% 7.99%
Retail -0.05% 0.09% 5.09% 1.09% 3.02% 12.10%
Finance, Insurance, Real-Estate 0.02% 0.27% 3.84% -0.39% 1.26% 7.88%
Services 0.00% 0.07% 4.10% -0.20% 1.75% 9.51%
Public Administration 0.02% 0.17% 0.50% 2.97% 3.88% 6.35%
Energy 0.32% 0.88% 9.54% -6.66% -5.19% 2.51%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Tempo Acquisition LLC/FI (USD) 5.75% 6/1/2025 Reg S (04/30/2020): 300MM First Lien Notes, Price at Issuance 100, Yielding 5.75%.

2. Export Development Canada (USD) 0.375% 11/12/2021 (04/30/2020): 250MM Senior Unsecured Notes.

3. Loblaw Cos LTD (CAD) 2.284% 5/7/2030 (04/30/2020): 350MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.28%.

4. Cominar REIT (CAD) 5.95% 5/5/2025 (04/30/2020): 150MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.95%.

5. Anthem Inc. (USD) 3.125% 5/15/2050 (04/30/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.748, Yielding 3.14%.

6. Anthem Inc. (USD) 2.25% 5/15/2030 (04/30/2020): 1100MM Senior Unsecured Notes, Price at Issuance 99.625, Yielding 2.29%.

7. Reliance Standard Life Global Funding II (USD) 2.75% 5/7/2025 144A (04/30/2020): 400MM Secured Notes, Price at Issuance 99.565, Yielding 2.84%.

8. NVR Inc. (USD) 3% 5/15/2030 (04/30/2020): 600MM Senior Unsecured Notes, Price at Issuance 99.81, Yielding 3.02%.

9. Fred Hutchinson Cancer Research Center (USD) 3.949% 1/1/2050 (04/30/2020): 121MM Unsecured Notes, Price at Issuance 100, Yielding 3.95%.

10. Norfolk Southern Corp. (USD) 3.05% 5/11/2050 (04/30/2020): 800MM Senior Unsecured Notes, Price at Issuance 99.765, Yielding 3.06%.

Additional Commentary

NEW ISSUANCE WATCH: on 05/01/2020 participants welcome a $2100MM new corporate-bond offering by Anthem Inc.
Top Widening Loans Top Narrowing Loans
Nets Hldgs AS (NOK) TLB1N L+400 02/06/2025
USIC Holdings Inc. (USD) TL L+325 12/09/2023
Savage Enterprises LLC (USD) TLB L+300 08/02/2025
Monitronics Intl. Inc. (USD) TL EXIT L+500 07/03/2024
SMG (USD) Bridge TL L+250 01/23/2025
Hamilton Holdco LLC (USD) TLB L+200 01/02/2027
Internet Brands Inc. (USD) TL2 L+750 08/16/2025
Orion EngineeRed Carbons Hldgs GmbH (USD) TLB L+200 07/25/2024
Hayward Ind Inc (USD) TLB L+350 08/04/2024
Beteiligungsgesellschaft Fuer Pensionsgelder (EUR) TLB E+350 06/14/2024

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 46 bp (basis points), as of 05/01/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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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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