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North American Bond Research – May 16, 2020

Posted on May 26, 2020
HIGH YIELD BOND RESEARCH
May 26, 2020
Bond Markets

GERMAN BUSINESS MORALE IMPROVED DRAMATICALLY TO PUSH MARKETS HIGHER WORLDWIDE. THIS GLIMPSE OF OPTIMISM GAVE A NEEDED SHOT OF CONFIDENCE THAT INVESTORS ARE LOOKING FOR. 10 Year Treasury notes were up 4.1 basis points. S&P +1.23%, Dow +2.17%, NASDAQ +0.17%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 5.6 MILLION+ CASES AND 350000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 1.72 MILLION+ CASES AND 101000+ DEATHS.  Among high-grade bonds showing topmost price gains at appreciable volumes traded, Hertz Corp (The) (USD) 7% 1/15/2028 made analysts’ ‘Conviction Buy’ list. (See the chart below for Hertz Corp  bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Ford Motor Co. 8.5% 4/21/2023 +2.5%
  Ford Motor Co. 9% 4/22/2025 +2.0%
  Diamond Offshore Drilling 5.7% 10/15/2039 +42.2%
  Teva Pharmaceutical Industries LTD 2.8% 7/21/2023 +0.1%
  Diamond Offshore Drilling Inc. 4.875% 11/1/2043 +21.6%
–   Hertz Corp. 6.25% 10/15/2022 -26.3%
  Petrobras Global Finance BV 7.375% 1/17/2027 -1.8%
  Gap Inc. 5.95% 4/12/2021 -0.1%
  Latam Finance Limited 6.875% 4/11/2024 Reg S -21.7%
  Olin Corp. 5.5% 8/15/2022 -0.9%
Hertz Corp.   6.25% 10/15/2022
Ford Motor Co.   8.5% 4/21/2023
Ford Motor Co.   9% 4/22/2025
Petrobras Global Finance BV   7.375% 1/17/2027
Gap Inc.   5.95% 4/12/2021
Diamond Offshore Drilling   5.7% 10/15/2039
Latam Finance Limited   6.875% 4/11/2024 Reg S
Teva Pharmaceutical Industries LTD   2.8% 7/21/2023
Olin Corp.   5.5% 8/15/2022
Diamond Offshore Drilling Inc.   4.875% 11/1/2043
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.05% 2.00% 3.26% -4.72% -2.71% 8.21%
Mining 0.02% 3.43% 17.73% -25.29% -25.92% -17.06%
Construction 0.10% 1.78% 2.97% -6.40% -3.95% 4.69%
Manufacturing 0.09% 2.16% 1.96% -6.67% -4.70% 2.85%
Transportion, Communication, Electric/Gas 0.03% 1.86% 2.93% -3.35% -1.06% 6.35%
Wholesale 0.03% 1.90% 5.83% -6.63% -5.29% 1.43%
Retail 0.16% 2.88% 2.94% -8.69% -7.03% 0.97%
Finance, Insurance, Real-Estate 0.07% 1.65% 1.77% -7.48% -5.60% 1.92%
Services 0.09% 2.05% 1.51% -6.82% -5.32% 2.85%
Public Administration -0.19% 1.53% 2.23% -7.42% -4.22% 3.53%
Energy 0.20% 3.90% 18.82% -22.00% -22.27% -15.04%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 05/26/2020)
1. Xplorenet Communictations Inc.: $1.425B credit facilities (B3/B-): $150MM revolver; $1.275B first-lien TL

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

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

4. Sedgwick Claimes Management Services Inc.: $300MM TL (B2/B)

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

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

7. Mohegan Tribal Gaming Authority: $100MM first lein TL (Caa1)

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

9. 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

10. Championx: $537MM TL

Additional Commentary

NEW ISSUANCE WATCH: No new issues.
Top Widening Loans Top Narrowing Loans
American Tire Distributors Inc. (USD) TL DIP PIK L+600 09/01/2023
Green Energy Partners (USD) TLB1 L+550 11/13/2021
Truck Hero Inc (USD) TL L+375 04/21/2024
Koninklijke Ten Cate NV (EUR) TLB E+350 01/27/2023
Emerald Performance Materials (USD) TL L+350 08/01/2021
Dubois Chemicals Inc. (USD) TL L+850 10/08/2027
Solenis Intl LP (EUR) TL E+425 6/26/2025
Hamilton Holdco LLC (USD) TLB L+200 01/02/2027
Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027
Cast & Crew Payroll LLC (USD) TLB L+375 02/07/2026

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 25 bp (basis points), as of 05/26/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
May 26, 2020
Bond Markets

GERMAN BUSINESS MORALE IMPROVED DRAMATICALLY TO PUSH MARKETS HIGHER WORLDWIDE. THIS GLIMPSE OF OPTIMISM GAVE A NEEDED SHOT OF CONFIDENCE THAT INVESTORS ARE LOOKING FOR. 10 Year Treasury notes were up 4.1 basis points. S&P +1.23%, Dow +2.17%, NASDAQ +0.17%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 5.6 MILLION+ CASES AND 350000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 1.72 MILLION+ CASES AND 101000+ DEATHS.  Among high-grade bonds showing topmost price gains at appreciable volumes traded, Halliburton Co. (USD) 5% 11/15/2045 made analysts’ ‘Conviction Buy’ list. (See the chart below for Halliburton Co.  bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   AT&T Inc. 3.65% 6/1/2051 +0.1%
  Boeing Co. 5.805% 5/1/2050 +3.1%
  AT&T Inc. 2.3% 6/1/2027 +1.2%
  Boeing Co. 5.15% 5/1/2030 +2.8%
  Banco Santander SA 2.746% 5/28/2025 +0.6%
–   AT&T Inc. 2.75% 6/1/2031 -0.1%
  Comcast Corp. 2.8% 1/15/2051 -0.6%
  Citigroup Inc. 4.412% 3/31/2031 -0.0%
  Boeing Co. 4.875% 5/1/2025 -0.2%
  Comcast Corp. 1.95% 1/15/2031 -0.1%
AT&T Inc.   3.65% 6/1/2051
AT&T Inc.   2.75% 6/1/2031
Boeing Co.   5.805% 5/1/2050
AT&T Inc.   2.3% 6/1/2027
Boeing Co.   5.15% 5/1/2030
Banco Santander SA   2.746% 5/28/2025
Boeing Co.   5.93% 5/1/2060
AT&T Inc.   3.5% 6/1/2041
AT&T Inc.   3.85% 6/1/2060
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 0.02% 1.61% 0.90% -2.19% 0.76% 5.29%
Mining 0.27% 3.05% 5.93% -4.50% -1.91% 5.73%
Construction 0.18% 1.08% 1.96% -4.13% -1.06% 5.39%
Manufacturing 0.09% 1.17% 0.83% 0.20% 2.95% 10.77%
Transportion, Communication, Electric/Gas 0.18% 1.45% 0.75% -0.30% 3.32% 12.32%
Wholesale 0.10% 1.10% 1.26% -1.88% 0.46% 8.63%
Retail 0.11% 1.50% 0.73% 0.47% 3.24% 11.96%
Finance, Insurance, Real-Estate 0.08% 0.78% 0.95% -0.37% 1.84% 7.87%
Services 0.10% 1.22% 0.39% -0.62% 2.17% 9.92%
Public Administration 0.01% -0.06% 0.31% 2.94% 4.19% 6.48%
Energy 0.40% 3.10% 5.82% -4.46% -1.90% 5.79%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]

(None Current 05/26/2020)
Additional Commentary

NEW ISSUANCE WATCH: on 05/21/2020 participants welcome a $500MM new corporate-bond offering by Kentucky Utilities.
Top Widening Loans Top Narrowing Loans
American Tire Distributors Inc. (USD) TL DIP PIK L+600 09/01/2023
Green Energy Partners (USD) TLB1 L+550 11/13/2021
Truck Hero Inc (USD) TL L+375 04/21/2024
Koninklijke Ten Cate NV (EUR) TLB E+350 01/27/2023
Emerald Performance Materials (USD) TL L+350 08/01/2021
Dubois Chemicals Inc. (USD) TL L+850 10/08/2027
Solenis Intl LP (EUR) TL E+425 6/26/2025
Hamilton Holdco LLC (USD) TLB L+200 01/02/2027
Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027
Cast & Crew Payroll LLC (USD) TLB L+375 02/07/2026

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 25 bp (basis points), as of 05/26/2020
  • 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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