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%.
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Market Summaries
North American Bond Research – May 12, 2020
Posted on May 12, 2020|
HIGH YIELD BOND RESEARCH
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May 12, 2020
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Bond Markets
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 | ||||||||||||||||||||||||||||||
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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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| 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
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INVESTMENT GRADE BOND RESEARCH
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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 | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
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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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| 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)
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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
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