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North American Bond Research – May 13, 2020

Posted on May 13, 2020
HIGH YIELD BOND RESEARCH
May 13, 2020
Bond Markets

MARKETS WAY DOWN AS FED CHIEF STATES FUTURE “HIGHLY UNCERTAIN” AND THAT THERE COULD BE “LASTING DAMAGE”. 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 4.4 MILLION+ CASES AND 300000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 1.4 MILLION+ CASES AND 85000+ 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. 9.625% 4/22/2030 +0.2%
  Teva Pharmaceuticals Fin BV 6% 4/15/2024 +0.0%
  Societe Generale VAR% PERP Reg S (3) +2.8%
  Occidental Petroleum Corp. 5.55% 3/15/2026 +0.5%
  Sally Hldg LLC 5.625% 12/1/2025 +1.9%
–   Ford Motor Co. 9% 4/22/2025 -3.8%
  General Motors Co. 6.25% 10/2/2043 -2.2%
  Petrobras Global Finance BV 8.75% 5/23/2026 -0.7%
  Encompass Health Corp. 4.75% 2/1/2030 -0.3%
  Ally Financial Inc. 4.125% 2/13/2022 -0.1%
Ford Motor Co.   9% 4/22/2025
General Motors Co.   6.25% 10/2/2043
Petrobras Global Finance BV   8.75% 5/23/2026
Encompass Health Corp.   4.75% 2/1/2030
Ford Motor Co.   9.625% 4/22/2030
Ally Financial Inc.   4.125% 2/13/2022
Ford Motor Co.   8.5% 4/21/2023
Continental Res Inc.   4.5% 4/15/2023
T-Mobile USA Inc.   6.5% 1/15/2026
Petrobras Global Finance BV   6.85% 6/5/2115
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.20% 1.14% 5.50% -5.62% -4.13% 6.41%
Mining 0.37% 0.87% 6.97% -27.13% -27.55% -18.75%
Construction 0.29% 1.29% 4.09% -7.40% -5.22% 3.81%
Manufacturing 0.17% 1.12% 2.33% -7.39% -5.76% 1.96%
Transportion, Communication, Electric/Gas 0.14% 0.86% 3.51% -4.64% -2.73% 4.86%
Wholesale 0.14% 1.14% 8.72% -9.08% -7.81% -1.49%
Retail 0.09% -0.03% 1.47% -11.43% -10.10% -2.25%
Finance, Insurance, Real-Estate 0.02% 0.33% 2.43% -9.30% -7.84% -0.07%
Services 0.16% 1.00% 2.64% -8.10% -6.88% 2.00%
Public Administration 0.02% 0.23% 7.97% -6.89% -5.29% 2.87%
Energy 0.46% 2.11% 11.22% -23.73% -24.07% -16.54%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Match Group Inc. (USD) 4.625% 6/1/2028 144A (05/12/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.63%.

2. SpringLeaf Finance Corp. (USD) 8.875% 6/1/2025 (05/12/2020): 600MM Senior Unsecured Notes, Price at Issuance 100, Yielding 8.88%.

3. Match Group Inc. (USD) 4.625% 6/1/2028 Reg S (05/12/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.63%.

4. Viking Cruises LTD (USD) 13% 5/15/2025 Reg S (05/12/2020): 675MM First Lien Notes, Price at Issuance 97, Yielding 13.85%.

5. Viking Cruises LTD (USD) 13% 5/15/2025 144A (05/12/2020): 675MM First Lien Notes, Price at Issuance 97, Yielding 13.85%.

6. Goodyear Tire & Rubber Co. (USD) 9.5% 5/31/2025 (05/13/2020): 600MM Senior Unsecured Notes, Price at Issuance 100, Yielding 9.5%.

7. Boyd Gaming Corp. (USD) 8.625% 6/1/2025 144A (05/13/2020): 600MM Senior Unsecured Notes, Price at Issuance 100, Yielding 8.63%.

8. Boyd Gaming Corp. (USD) 8.625% 6/1/2025 Reg S (05/13/2020): 600MM Senior Unsecured Notes, Price at Issuance 100, Yielding 8.63%.

9. Outfront Media Capital LLC (USD) 6.25% 6/15/2025 144A (05/13/2020): 400MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.25%.

10. Outfront Media Capital LLC (USD) 6.25% 6/15/2025 Reg S (05/13/2020): 400MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.25%.

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

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

3. Ziply Fiber: $790.5MM TLB

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

5. Radio Systems Corp.: $725MM Loans: $100M ABL Facility; $625MM Senior secured bridge loan

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

7. 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

8. Championx: $537MM TL

9. Alterra Mountain Co. : $400MM incremental TL (B1/B)

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

Additional Commentary

NEW ISSUANCE WATCH: Match Group Inc issued $500 in notes.
Top Widening Loans Top Narrowing Loans
Globalfoundries Inc. (USD) TLB L+400 06/05/2026
Del Monte Foods Co. (USD) TL L+725 08/18/2021
SSH Group Hldg Inc. (USD) TL2 L+825 07/30/2026
Panera Bread Co. (USD) TLA L+200 06/13/2022
Wittur (EUR) TLB E+450 09/23/2026
Wesco Aircraft Hardware Corp. (USD) TLB L+250 02/28/2021
Hamilton Holdco LLC (USD) TLB L+200 01/02/2027
Orion EngineeRed Carbons Hldgs GmbH (USD) TLB L+200 07/25/2024
Grifols Worldwide Operations LTD (EUR) TLB E+225 11/15/2027
HSE24 Multichannel GmbH (EUR) TLB3 E+375 09/30/2021

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 30 bp (basis points), as of 05/13/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
May 13, 2020
Bond Markets

MARKETS WAY DOWN AS FED CHIEF STATES FUTURE “HIGHLY UNCERTAIN” AND THAT THERE COULD BE “LASTING DAMAGE”. 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 4.4 MILLION+ CASES AND 300000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 1.4 MILLION+ CASES AND 85000+ 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
+   Walt Disney Co. 2.65% 1/13/2031 +0.1%
  Walt Disney Co. 3.6% 1/13/2051 +0.9%
  Boeing Co. 5.15% 5/1/2030 +0.1%
  Walt Disney Co. 3.5% 5/13/2040 +1.2%
  Charles Schwab Corp. 5.375% PERP +1.0%
–   Walt Disney Co. 1.75% 1/13/2026 -0.2%
  Boeing Co. 5.805% 5/1/2050 -1.6%
  Boeing Co. 5.93% 5/1/2060 -1.1%
  Boeing Co. 5.705% 5/1/2040 -1.3%
  General Electric Co. 4.35% 5/1/2050 -1.7%
Walt Disney Co.   2.65% 1/13/2031
Walt Disney Co.   1.75% 1/13/2026
Boeing Co.   5.805% 5/1/2050
Boeing Co.   5.93% 5/1/2060
Walt Disney Co.   3.6% 1/13/2051
Boeing Co.   5.705% 5/1/2040
Boeing Co.   5.15% 5/1/2030
Walt Disney Co.   3.5% 5/13/2040
General Electric Co.   4.35% 5/1/2050
Southwest Airlines Co.   1.25% 5/1/2025
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.03% -0.15% 1.53% -1.25% 1.37% 4.82%
Mining 0.19% 0.23% 4.98% -6.91% -5.19% 2.97%
Construction 0.03% -0.45% 3.43% -4.11% -1.48% 5.29%
Manufacturing 0.09% -0.62% 1.13% -0.84% 1.29% 9.31%
Transportion, Communication, Electric/Gas 0.01% -1.06% 2.50% -1.27% 1.35% 10.44%
Wholesale 0.02% -0.20% 2.23% -2.38% -0.37% 7.36%
Retail 0.05% -0.96% 0.98% -0.55% 1.57% 10.76%
Finance, Insurance, Real-Estate 0.03% -0.28% 1.63% -0.90% 0.78% 7.09%
Services 0.05% -0.83% 0.98% -1.41% 0.71% 8.98%
Public Administration 0.05% 0.13% 0.64% 3.20% 4.19% 6.39%
Energy 0.17% 0.26% 5.48% -6.72% -5.11% 2.78%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Appalachian Power Co. (USD) 3.7% 5/1/2050 (05/12/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.409, Yielding 3.73%.

2. Caterpillar Financial Services Corp. (USD) 1.45% 5/15/2025 (05/12/2020): 600MM Senior Unsecured Notes, Price at Issuance 99.794, Yielding 1.49%.

3. Caterpillar Financial Services Corp. (USD) FLT% 5/13/2022 (05/12/2020): 300MM Senior Unsecured Notes, Price at Issuance 100.

4. Meglobal Canada Inc. (USD) 5.875% 5/18/2030 Reg S (05/12/2020): 600MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.88%.

5. Meglobal Canada Inc. (USD) 5.875% 5/18/2030 144A (05/12/2020): 600MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.88%.

6. Viacom Inc. (USD) 4.95% 5/19/2050 (05/12/2020): 1000MM Senior Unsecured Notes, Price at Issuance 94.987, Yielding 5.28%.

7. Meglobal Canada Inc. (USD) 5% 5/18/2025 144A (05/12/2020): 1000MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5%.

8. Aon Corp. (USD) 2.8% 5/15/2030 (05/12/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.965, Yielding 2.8%.

9. Williams Cos Inc. (USD) 3.5% 11/15/2030 (05/12/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.495, Yielding 3.56%.

Additional Commentary

NEW ISSUANCE WATCH: on 05/13/2020 participants welcome a $1000MM new corporate-bond offering by AON Corp.
Top Widening Loans Top Narrowing Loans
Globalfoundries Inc. (USD) TLB L+400 06/05/2026
Del Monte Foods Co. (USD) TL L+725 08/18/2021
SSH Group Hldg Inc. (USD) TL2 L+825 07/30/2026
Panera Bread Co. (USD) TLA L+200 06/13/2022
Wittur (EUR) TLB E+450 09/23/2026
Wesco Aircraft Hardware Corp. (USD) TLB L+250 02/28/2021
Hamilton Holdco LLC (USD) TLB L+200 01/02/2027
Orion EngineeRed Carbons Hldgs GmbH (USD) TLB L+200 07/25/2024
Grifols Worldwide Operations LTD (EUR) TLB E+225 11/15/2027
HSE24 Multichannel GmbH (EUR) TLB3 E+375 09/30/2021

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 30 bp (basis points), as of 05/13/2020
  • 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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