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North American Bond Research – May 12, 2020

Posted on May 12, 2020
HIGH YIELD BOND RESEARCH
May 12, 2020
Bond Markets

MARKETS DOWN AGAIN AS BOEING PREDICTS AT LEAST ONE AIRLINE BANKRUPTCY. THE “IRRATIONAL EXUBERANCE” IN THE MARKET MAYBE FINALLY HITTING THE ECONOMIC REALITY OF MAINSTREET. 10 Year Treasury notes were down 4.8 basis points. S&P -2.05%, Dow -1.89%, NASDAQ -2.06%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 4.2 MILLION+ CASES AND 291000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 1.4 MILLION+ CASES AND 83000+ 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
+   Ford Motor Co. 9% 4/22/2025 +2.0%
  Ford Motor Co. 8.5% 4/21/2023 +1.8%
  Ford Motor Co. 9.625% 4/22/2030 +0.6%
  Occidental Petroleum Corp. 2.7% 8/15/2022 +1.9%
  Intl Lease Finance Corp. 8.625% 1/15/2022 +0.5%
–   Intl Lease Finance Corp. 8.25% 12/15/2020 -0.8%
  Petrobras Global Finance BV 6.85% 6/5/2115 -0.5%
  Gran Tierra Energy Inc. 6.25% 2/15/2025 Reg S -0.9%
  Radian Group Inc. 4.875% 3/15/2027 -0.4%
  Gulfport Energy Corp. 6% 10/15/2024 -4.5%
Ford Motor Co.   9% 4/22/2025
Ford Motor Co.   8.5% 4/21/2023
Intl Lease Finance Corp.   8.25% 12/15/2020
Petrobras Global Finance BV   6.85% 6/5/2115
Ford Motor Co.   9.625% 4/22/2030
Gran Tierra Energy Inc.   6.25% 2/15/2025 Reg S
Occidental Petroleum Corp.   2.7% 8/15/2022
Intl Lease Finance Corp.   8.625% 1/15/2022
Radian Group Inc.   4.875% 3/15/2027
Goodyear Tire & Rubber Co.   5.125% 11/15/2023
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.07% 1.09% 5.24% -5.87% -4.37% 6.16%
Mining 0.05% 1.47% 5.16% -27.94% -28.66% -19.68%
Construction 0.09% 1.03% 3.74% -7.80% -5.65% 3.36%
Manufacturing 0.08% 0.95% 2.33% -7.36% -5.79% 1.94%
Transportion, Communication, Electric/Gas 0.02% 0.97% 3.67% -5.24% -3.39% 4.11%
Wholesale 0.03% 0.93% 8.26% -8.08% -6.82% -0.07%
Retail -0.19% 0.00% 0.70% -12.43% -11.08% -3.30%
Finance, Insurance, Real-Estate -0.02% 0.20% 2.41% -9.28% -7.83% -0.06%
Services 0.02% 0.79% 3.21% -7.49% -6.27% 2.29%
Public Administration 0.02% 0.23% 7.97% -6.98% -5.31% 2.87%
Energy 0.13% 2.66% 9.32% -24.79% -25.20% -17.66%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Lamar Media Corp. (USD) 4.875% 1/15/2029 144A (05/11/2020): 400MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.88%.

2. Bausch Health Cos Inc. (USD) 6.25% 2/15/2029 Reg S (05/11/2020): 1500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.25%.

3. Lamar Media Corp. (USD) 4.875% 1/15/2029 Reg S (05/11/2020): 400MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.88%.

4. PowerTeam Services LLC (USD) 9.03% 12/4/2025 Reg S (05/11/2020): 586MM First Lien Notes, Price at Issuance 98, Yielding 9.5%.

5. Bausch Health Cos Inc. (USD) 6.25% 2/15/2029 144A (05/11/2020): 1500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.25%.

6. Powerstream Inc. (USD) 9.033% 12/4/2025 144A (05/11/2020): 1173MM First Lien Notes, Price at Issuance 98, Yielding 9.5%.

1. INTL Fcstone: $350MM senior secured notes

2. Alpha Auto Group: $225MM notes

3. Martin Midstream Partners LP: $400MM senior secured notes

4. 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

5. Logmein Inc.: $3.55B credit facilities: $250MM Revolver; $2.7B first lien TL; $600MM second-lien TL

6. Conservice Midco LLc: $715MM credit facilities: $50MM revolver (B2/B); $475MM cove-lite TL (B2/B); $190MM TL

7. Championx: $537MM TL

8. BRP Inc.: $600MM TL B2 (B1)

9. RSA: $1.425B credit facilities: $75MM revolver; $1B TL; $350MM TL

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

Additional Commentary

NEW ISSUANCE WATCH: Lamar Media issued $400 in notes.
Top Widening Loans Top Narrowing Loans
American Tire Distributors Inc. (USD) TL DIP PIK L+600 09/01/2023
Specialty Chemical Resources Inc. (EUR) TLB1 E+450 03/05/2027
Fusion Connect Inc. (USD) TL EXIT L+950 12/31/2049
Allnex Sarl (USD) TLB3 L+325 09/13/2023
Coty Inc. (EUR) TLA E+175 04/05/2023
Orion EngineeRed Carbons Hldgs GmbH (USD) TLB L+200 07/25/2024
Global Blue Finance Sarl (EUR) TLB E+350 12/12/2022
Concordia International (USD) TL EXIT L+550 09/06/2024
Diebold Inc. (USD) TLA L+925 08/30/2022
BVI Medical Inc. (EUR) TLB E+350 02/28/2026

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 33 bp (basis points), as of 05/12/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
May 12, 2020
Bond Markets

MARKETS DOWN AGAIN AS BOEING PREDICTS AT LEAST ONE AIRLINE BANKRUPTCY. THE “IRRATIONAL EXUBERANCE” IN THE MARKET MAYBE FINALLY HITTING THE ECONOMIC REALITY OF MAINSTREET. 10 Year Treasury notes were down 4.8 basis points. S&P -2.05%, Dow -1.89%, NASDAQ -2.06%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 4.2 MILLION+ CASES AND 291000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 1.4 MILLION+ CASES AND 83000+ 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
+   Boeing Co. 5.15% 5/1/2030 +0.1%
  General Motors Co. 6.125% 10/1/2025 +0.7%
  Boeing Co. 5.805% 5/1/2050 +2.5%
  Boeing Co. 5.04% 5/1/2027 +1.0%
  Ford Motor Co. 9% 4/22/2025 +2.0%
–   Boeing Co. 4.875% 5/1/2025 -0.9%
  Walt Disney Co. 4.7% 3/23/2050 -0.0%
  Charles Schwab Corp. 5.375% PERP -2.0%
  Pioneer Natural Resources Co. 4.45% 1/15/2026 -0.1%
  Caterpillar Inc. 3.25% 4/9/2050 -1.7%
Boeing Co.   5.15% 5/1/2030
General Motors Co.   6.125% 10/1/2025
Boeing Co.   5.805% 5/1/2050
Boeing Co.   5.04% 5/1/2027
Ford Motor Co.   9% 4/22/2025
Boeing Co.   4.875% 5/1/2025
General Motors Co.   6.8% 10/1/2027
Walt Disney Co.   4.7% 3/23/2050
Boeing Co.   5.93% 5/1/2060
General Motors Co.   5.95% 4/1/2049
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.12% 0.07% 2.05% -2.65% 0.03% 4.94%
Mining -0.21% 0.17% 4.77% -7.09% -5.34% 2.94%
Construction -0.17% -0.63% 3.85% -4.84% -2.50% 4.14%
Manufacturing -0.22% -0.72% 1.14% -1.19% 1.05% 8.99%
Transportion, Communication, Electric/Gas -0.37% -1.13% 2.58% -1.38% 1.33% 10.46%
Wholesale -0.12% -0.29% 2.37% -2.93% -0.86% 7.12%
Retail -0.32% -1.10% 1.01% -0.90% 1.30% 10.30%
Finance, Insurance, Real-Estate -0.10% -0.38% 1.59% -1.08% 0.73% 7.19%
Services -0.28% -0.91% 0.97% -1.58% 0.62% 8.87%
Public Administration -0.05% 0.08% 0.59% 3.10% 4.13% 6.36%
Energy -0.17% 0.28% 5.32% -6.93% -5.36% 2.56%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Southwestern Public Service Co. (USD) 3.15% 5/1/2050 (05/11/2020): 350MM Secured Notes, Price at Issuance 99.138, Yielding 3.19%.

2. Becton Dickinson & Co. (USD) 2.823% 5/20/2030 (05/11/2020): 750MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.82%.

3. Becton Dickinson & Co. (USD) 3.794% 5/20/2050 (05/11/2020): 750MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.79%.

4. Suncor Energy Inc. (USD) 2.8% 5/15/2023 (05/11/2020): 450MM Senior Unsecured Notes, Price at Issuance 99.903, Yielding 2.83%.

5. Suncor Energy Inc. (USD) 3.1% 5/15/2025 (05/11/2020): 550MM Senior Unsecured Notes, Price at Issuance 99.949, Yielding 3.11%.

6. Fiserv Inc. (USD) 2.25% 6/1/2027 (05/11/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.934, Yielding 2.26%.

7. Fiserv Inc. (USD) 2.65% 6/1/2030 (05/11/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.824, Yielding 2.67%.

8. Quest Diagnostics Inc. (USD) 2.8% 6/30/2031 (05/11/2020): 550MM Senior Unsecured Notes, Price at Issuance 99.854, Yielding 2.82%.

9. Walt Disney Co. (USD) 1.75% 1/13/2026 (05/11/2020): 1500MM Senior Unsecured Notes, Price at Issuance 99.741, Yielding 1.8%.

10. ITC Holdings Corp. (USD) 2.95% 5/14/2030 144A (05/11/2020): 700MM Senior Unsecured Notes, Price at Issuance 99.794, Yielding 2.97%.

(None Current 05/12/2020)
Additional Commentary

NEW ISSUANCE WATCH: on 05/12/2020 participants welcome a $1000MM new corporate-bond offering by Fiserv Inc.
Top Widening Loans Top Narrowing Loans
American Tire Distributors Inc. (USD) TL DIP PIK L+600 09/01/2023
Specialty Chemical Resources Inc. (EUR) TLB1 E+450 03/05/2027
Fusion Connect Inc. (USD) TL EXIT L+950 12/31/2049
Allnex Sarl (USD) TLB3 L+325 09/13/2023
Coty Inc. (EUR) TLA E+175 04/05/2023
Orion EngineeRed Carbons Hldgs GmbH (USD) TLB L+200 07/25/2024
Global Blue Finance Sarl (EUR) TLB E+350 12/12/2022
Concordia International (USD) TL EXIT L+550 09/06/2024
Diebold Inc. (USD) TLA L+925 08/30/2022
BVI Medical Inc. (EUR) TLB E+350 02/28/2026

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 33 bp (basis points), as of 05/12/2020
  • 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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