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North American Bond Research – May 14, 2020

Posted on May 14, 2020
HIGH YIELD BOND RESEARCH
May 14, 2020
Bond Markets

STOCKS WERE DOWN MOST OF THE DAY AFTER THE JOBLESS REPORT REPORTED ALMOST 3 MILLION AMERICANS FILING FOR UNEMPLOYMENT. BUT, INVESTORS SHRUGGED THAT OFF AND STILL BELIEVE A “V” SHAPE RECOVERY WILL HAPPEN. 10 Year Treasury notes were down 3 basis points. S&P +1.15%, Dow +1.62%, NASDAQ +0.91%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 4.5 MILLION+ CASES AND 303000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 1.45 MILLION+ CASES AND 87000+ 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
+   HCA Inc. 3.5% 9/1/2030 +0.3%
  HCA Inc. 5% 3/15/2024 +0.1%
  QEP Resources Inc. 5.25% 5/1/2023 +3.8%
  Occidental Petroleum Corp. 3.5% 8/15/2029 +1.2%
  CenterPoint Energy Inc. VAR% PERP +0.2%
–   Petrobras Global Finance BV 6.85% 6/5/2115 -0.8%
  Ford Motor Co. 8.5% 4/21/2023 -0.1%
  SpringLeaf Finance Corp. 8.875% 6/1/2025 -0.4%
  Ford Motor Co. 9.625% 4/22/2030 -2.3%
  Ford Motor Co. 9% 4/22/2025 -0.1%
Petrobras Global Finance BV   6.85% 6/5/2115
Ford Motor Co.   8.5% 4/21/2023
SpringLeaf Finance Corp.   8.875% 6/1/2025
Ford Motor Co.   9.625% 4/22/2030
Ford Motor Co.   9% 4/22/2025
Matador Resources Co.   5.875% 9/15/2026
HCA Inc.   3.5% 9/1/2030
Vale Overseas LTD   6.25% 8/10/2026
Ford Motor Co.   4.75% 1/15/2043
Intelsat Luxembourg SA   8.125% 6/1/2023
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.17% 0.66% 4.31% -5.92% -4.30% 6.69%
Mining -0.53% -0.22% 4.99% -26.80% -27.54% -19.25%
Construction 0.07% 1.20% 2.79% -7.40% -5.12% 4.18%
Manufacturing -0.22% 0.68% 0.45% -8.13% -6.44% 1.46%
Transportion, Communication, Electric/Gas -0.02% 0.86% 2.49% -5.16% -3.15% 4.54%
Wholesale -0.09% 0.51% 7.82% -7.86% -6.49% 0.49%
Retail -0.34% -0.53% -0.66% -11.23% -9.85% -1.62%
Finance, Insurance, Real-Estate -0.17% 0.17% 1.05% -9.31% -7.77% 0.15%
Services -0.12% 0.79% 1.44% -7.47% -6.13% 2.33%
Public Administration 0.23% 0.34% 7.83% -7.14% -5.08% 2.98%
Energy -0.44% 1.06% 8.58% -23.94% -24.43% -17.64%
 
Total returns (non-annualized) by rating, market weighted.

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

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

3. 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%.

4. 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%.

5. 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%.

6. Uber Technologies Inc. (USD) 7.5% 5/15/2025 144A (05/13/2020): 900MM Senior Unsecured Notes, Price at Issuance 100, Yielding 7.5%.

7. Live Nation Entertainment Inc. (USD) 6.5% 5/15/2027 144A (05/13/2020): 1200MM Secured Notes, Price at Issuance 100, Yielding 6.5%.

8. Live Nation Entertainment Inc. (USD) 6.5% 5/15/2027 (05/13/2020): 1200MM Secured Notes, Price at Issuance 100, Yielding 6.5%.

9. HUB Intl. LTD (USD) 7% 5/1/2026 (05/13/2020): 350MM Senior Unsecured Notes, Price at Issuance 98.76, Yielding 7.26%.

10. Boxer Parent Co. Inc. (USD) 7.125% 10/2/2025 144A (05/14/2020): 600MM First Lien Notes, Price at Issuance 100, Yielding 7.13%.

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: Boxer Parent Inc issued $600 in notes.
Top Widening Loans Top Narrowing Loans
OVH Groupe (EUR) TLB E+325 11/29/2026
American Tire Distributors Inc. (USD) TL DIP PIK L+600 09/01/2023
Corialis (EUR) TL E+350 03/29/2024
McAfee Inc. (EUR) TLB E+350 09/29/2024
AR Packaging Group (EUR) TLB E+475 08/15/2024
Genesis Care Finance Property LTD (EUR) TLB E+350 10/17/2025
PHS Group PLC (GBP) TL L+525 11/30/2021
Nets Hldgs AS (NOK) TLB1N L+400 02/06/2025
Del Monte Foods Co. (USD) TL L+725 08/18/2021
Excelitas Technologies Corp. (EUR) TL E+350 12/04/2024

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 28 bp (basis points), as of 05/14/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
May 14, 2020
Bond Markets

STOCKS WERE DOWN MOST OF THE DAY AFTER THE JOBLESS REPORT REPORTED ALMOST 3 MILLION AMERICANS FILING FOR UNEMPLOYMENT. BUT, INVESTORS SHRUGGED THAT OFF AND STILL BELIEVE A “V” SHAPE RECOVERY WILL HAPPEN. 10 Year Treasury notes were down 3 basis points. S&P +1.15%, Dow +1.62%, NASDAQ +0.91%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 4.5 MILLION+ CASES AND 303000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 1.45 MILLION+ CASES AND 87000+ 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. 3.6% 1/13/2051 +1.7%
  PayPal Hldg Inc. 3.25% 6/1/2050 +1.2%
  Walt Disney Co. 4.7% 3/23/2050 +0.1%
  Coca-Cola Co. 1.45% 6/1/2027 +0.0%
  JPMorgan Chase & Co. 2.522% 4/22/2031 +0.2%
–   Boeing Co. 5.805% 5/1/2050 -0.1%
  Bank of NY Mellon Corp. VAR% PERP -1.3%
  Southwest Airlines Co. 1.25% 5/1/2025 -0.3%
  Boeing Co. 5.93% 5/1/2060 -0.5%
  Boeing Co. 5.15% 5/1/2030 -0.0%
Boeing Co.   5.805% 5/1/2050
Walt Disney Co.   3.6% 1/13/2051
PayPal Hldg Inc.   3.25% 6/1/2050
Bank of NY Mellon Corp.   VAR% PERP
Boeing Co.   5.15% 5/1/2030
Walt Disney Co.   4.7% 3/23/2050
Southwest Airlines Co.   1.25% 5/1/2025
Coca-Cola Co.   1.45% 6/1/2027
Boeing Co.   5.93% 5/1/2060
JPMorgan Chase & Co.   2.522% 4/22/2031
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.26% -0.41% 0.70% -1.53% 1.11% 4.82%
Mining 0.22% 0.46% 3.40% -6.47% -4.74% 3.13%
Construction 0.26% -0.15% 2.32% -3.92% -1.24% 4.97%
Manufacturing 0.18% -0.03% 0.34% -0.60% 1.47% 9.29%
Transportion, Communication, Electric/Gas 0.21% -0.36% 1.38% -0.85% 1.77% 10.69%
Wholesale 0.15% 0.04% 1.23% -2.08% -0.35% 7.22%
Retail 0.23% -0.30% 0.05% -0.48% 1.62% 10.59%
Finance, Insurance, Real-Estate 0.15% -0.03% 0.95% -0.84% 0.87% 7.14%
Services 0.13% -0.30% 0.23% -1.11% 1.02% 8.98%
Public Administration 0.01% 0.14% 0.85% 3.20% 4.18% 6.22%
Energy 0.24% 0.59% 3.71% -6.42% -4.79% 3.06%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. First Interstate Bancsys (USD) VAR% 5/15/2030 (05/13/2020): 100MM Subordinated Notes, Price at Issuance 100.

2. Alleghany Corp. (USD) 3.625% 5/15/2030 (05/13/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.867, Yielding 3.64%.

3. Choice Properties REIT (CAD) 2.84% 5/21/2027 (05/13/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.84%.

4. Brighthouse Financial Inc (USD) 5.625% 5/15/2030 (05/13/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.871, Yielding 5.64%.

5. Duke Energy Corp. (USD) 2.45% 6/1/2030 (05/13/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.681, Yielding 2.49%.

6. Entergy Corp. (USD) 2.8% 6/15/2030 (05/13/2020): 600MM Senior Unsecured Notes, Price at Issuance 99.217, Yielding 2.89%.

7. Entergy Corp. (USD) 3.75% 6/15/2050 (05/13/2020): 600MM Senior Unsecured Notes, Price at Issuance 98.4, Yielding 3.84%.

8. Stifel Financial Corp. (USD) 4% 5/15/2030 (05/13/2020): 400MM Senior Unsecured Notes, Price at Issuance 99.285, Yielding 4.09%.

9. Regions Financial Corp. (USD) 2.25% 5/18/2025 (05/13/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.695, Yielding 2.31%.

10. EI DuPont de Nemours & Co. (USD) 1.7% 7/15/2025 (05/13/2020): 500MM Senior Unsecured Notes, Price at Issuance 99, Yielding 1.9%.

Additional Commentary

NEW ISSUANCE WATCH: on 05/13/2020 participants welcome a $500MM new corporate-bond offering by Brighthouse Financial.
Top Widening Loans Top Narrowing Loans
OVH Groupe (EUR) TLB E+325 11/29/2026
American Tire Distributors Inc. (USD) TL DIP PIK L+600 09/01/2023
Corialis (EUR) TL E+350 03/29/2024
McAfee Inc. (EUR) TLB E+350 09/29/2024
AR Packaging Group (EUR) TLB E+475 08/15/2024
Genesis Care Finance Property LTD (EUR) TLB E+350 10/17/2025
PHS Group PLC (GBP) TL L+525 11/30/2021
Nets Hldgs AS (NOK) TLB1N L+400 02/06/2025
Del Monte Foods Co. (USD) TL L+725 08/18/2021
Excelitas Technologies Corp. (EUR) TL E+350 12/04/2024

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 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

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