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North American Bond Research – May 4, 20202

Posted on May 4, 2020
HIGH YIELD BOND RESEARCH
May 4, 2020
Bond Markets

STOCKS WERE HIGHER AS TECH AND ENERGY COMPANIES CLIMBED. OIL JUMPED TO 21.38. THE US IS SEEKING TO RAISE UP TO $3 TRILLION THIS QUARTER TO HELP BUSINESSES AND INDIVIDUALS DEAL WITH THE FINANCIAL FALLOUT SURROUNDING THE COVID-19 PANDEMIC. FTSE 100 -0.16%, 10 Year Treasury notes were up 2 basis points. S&P +0.42%, Dow +0.11%, NASDAQ +1.23%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 3.6 MILLION+ CASES AND 251000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 1.2 MILLION+ CASES AND 70000+ DEATHS.  Among high-grade bonds showing topmost price gains at appreciable volumes traded, Ferrellgas Partners LP (USD) 8.625% 6/15/2020 made analysts’ ‘Conviction Buy’ list. (See the chart below for Ferrellgas Partners LP bonds) Pierre Robert
Key Gainers and Losers Volume Leaders
+   Chesapeake Energy Corp. 11.5% 1/1/2025 Reg S +22.8%
  HCA Inc. 5.25% 4/15/2025 +1.2%
  US Steel Corp. 6.875% 8/15/2025 +0.1%
  Gap Inc. 5.95% 4/12/2021 +0.1%
  Occidental Petroleum Corp. 2.9% 8/15/2024 +0.2%
–   Ford Motor Co. 9.625% 4/22/2030 -1.2%
  Ford Motor Co. 9% 4/22/2025 -1.0%
  Petrobras Global Finance BV 6.85% 6/5/2115 -1.6%
  Southwestern Energy Co. 4.95% 1/23/2025 -0.1%
  Ford Motor Co. 8.5% 4/21/2023 -0.4%
Ford Motor Co.   9.625% 4/22/2030
Ford Motor Co.   9% 4/22/2025
Petrobras Global Finance BV   6.85% 6/5/2115
Southwestern Energy Co.   4.95% 1/23/2025
Ford Motor Co.   8.5% 4/21/2023
Howmet Aerospace Inc.   6.875% 5/1/2025
Chesapeake Energy Corp.   11.5% 1/1/2025 Reg S
Dynegy Inc.   5.875% 6/1/2023 (1)
Western Digital Corp.   4.75% 2/15/2026
TransDigm Inc.   6.5% 7/15/2024
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.12% 0.51% 7.33% -6.32% -5.18% 5.47%
Mining 0.62% 2.00% 20.67% -30.20% -30.83% -23.55%
Construction -0.07% 0.54% 4.10% -7.59% -6.09% 2.52%
Manufacturing -0.14% -0.11% 4.54% -8.15% -7.22% 0.05%
Transportion, Communication, Electric/Gas -0.06% 0.27% 6.81% -4.60% -4.01% 3.31%
Wholesale 0.03% 0.48% 10.29% -10.65% -9.49% -3.33%
Retail 0.03% 0.63% 4.53% -10.45% -9.63% -1.89%
Finance, Insurance, Real-Estate -0.03% 0.76% 4.08% -8.61% -7.55% -0.14%
Services -0.11% -0.07% 4.60% -7.89% -7.31% 0.91%
Public Administration 0.34% 1.59% 7.60% -6.25% -5.38% 3.29%
Energy 0.73% 2.74% 25.12% -27.96% -28.22% -22.11%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 05/04/2020)
1. BRP Inc.: $600MM TL B2 (B1)

2. Championx: $537MM TL

3. 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

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

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

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

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

8. Open Lending LLC: $225MM TLB

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

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

Additional Commentary

NEW ISSUANCE WATCH: No New Issues.
Top Widening Loans Top Narrowing Loans
Aptean Inc. (USD) TL L+425 04/24/2026
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
Samsonite Intl. SA (USD) TLB L+175 04/19/2025
Panera Bread Co. (USD) TLA L+200 06/13/2022
Concordia International (USD) TL EXIT L+550 09/06/2024
Archroma Global Services (EUR) TLB1 E+400 07/11/2024
Hamilton Holdco LLC (USD) TLB L+200 01/02/2027
Rocket Software (USD) TL L+425 11/28/2025
Orion EngineeRed Carbons Hldgs GmbH (USD) TLB L+200 07/25/2024
Imperva Inc. (USD) TL2 L+775 01/10/2027

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 44 bp (basis points), as of 05/04/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
May 4, 2020
Bond Markets

STOCKS WERE HIGHER AS TECH AND ENERGY COMPANIES CLIMBED. OIL JUMPED TO 21.38. THE US IS SEEKING TO RAISE UP TO $3 TRILLION THIS QUARTER TO HELP BUSINESSES AND INDIVIDUALS DEAL WITH THE FINANCIAL FALLOUT SURROUNDING THE COVID-19 PANDEMIC. FTSE 100 -0.16%, 10 Year Treasury notes were up 2 basis points. S&P +0.42%, Dow +0.11%, NASDAQ +1.23%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 3.6 MILLION+ CASES AND 251000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 1.2 MILLION+ CASES AND 70000+ 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 +0.2%
  Boeing Co. 5.805% 5/1/2050 +1.9%
  Boeing Co. 4.508% 5/1/2023 +0.0%
  Boeing Co. 4.875% 5/1/2025 +0.5%
  Boeing Co. 5.93% 5/1/2060 +0.1%
–   Southwest Airlines Co. 1.25% 5/1/2025 -3.3%
  Oracle Corp. 2.95% 4/1/2030 -0.4%
  AT&T Inc. 4.5% 3/9/2048 -1.9%
  Lam Research Corp. 1.9% 6/15/2030 -0.8%
  Citigroup Inc. 3.106% 4/8/2026 -0.0%
Boeing Co.   5.15% 5/1/2030
Boeing Co.   5.805% 5/1/2050
Boeing Co.   4.508% 5/1/2023
Boeing Co.   4.875% 5/1/2025
Boeing Co.   5.93% 5/1/2060
Boeing Co.   5.705% 5/1/2040
Boeing Co.   5.04% 5/1/2027
Southwest Airlines Co.   1.25% 5/1/2025
Oracle Corp.   2.95% 4/1/2030
AT&T Inc.   4.5% 3/9/2048
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.03% 0.05% 4.20% -1.90% 0.48% 4.99%
Mining 0.12% 1.02% 9.96% -7.13% -5.41% 2.61%
Construction 0.02% 0.34% 5.70% -3.62% -1.05% 6.11%
Manufacturing -0.12% -0.16% 4.08% -0.09% 2.10% 9.83%
Transportion, Communication, Electric/Gas -0.07% -0.14% 6.49% 0.03% 2.82% 11.94%
Wholesale -0.09% 0.14% 4.41% -1.62% 0.32% 8.13%
Retail -0.16% -0.16% 4.25% 0.44% 2.52% 11.39%
Finance, Insurance, Real-Estate -0.03% 0.21% 3.15% -0.51% 1.22% 7.62%
Services -0.09% -0.10% 3.54% -0.28% 1.85% 9.37%
Public Administration -0.01% 0.13% 0.37% 2.78% 3.87% 6.41%
Energy 0.16% 0.91% 10.08% -7.10% -5.53% 2.15%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. New York Life Insurance Co. (USD) 1.1% 5/5/2023 (05/04/2020): 650MM Secured Notes, Price at Issuance 99.979, Yielding 1.11%.

2. Teachers Insurance & Annuity Assoc. Of America (USD) 3.3% 5/15/2050 144A (05/04/2020): 1250MM Subordinated Notes, Price at Issuance 99.867, Yielding 3.31%.

3. Oneok Inc. (USD) 6.35% 1/15/2031 (05/04/2020): 600MM Senior Unsecured Notes, Price at Issuance 99.667, Yielding 6.39%.

4. Oneok Inc. (USD) 7.15% 1/15/2051 (05/04/2020): 300MM Senior Unsecured Notes, Price at Issuance 99.632, Yielding 7.18%.

5. Oneok Inc. (USD) 5.85% 1/15/2026 (05/04/2020): 600MM Senior Unsecured Notes, Price at Issuance 99.943, Yielding 5.86%.

6. Marsh & McLennan Cos Inc. (USD) 2.25% 11/15/2030 (05/04/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.146, Yielding 2.34%.

7. Starbucks Corp. (USD) 1.3% 5/7/2022 (05/04/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.933, Yielding 1.33%.

8. Starbucks Corp. (USD) 2.55% 11/15/2030 (05/04/2020): 1250MM Senior Unsecured Notes, Price at Issuance 99.725, Yielding 2.58%.

9. Starbucks Corp. (USD) 3.5% 11/15/2050 (05/04/2020): 1250MM Senior Unsecured Notes, Price at Issuance 99.33, Yielding 3.54%.

10. Altria Group Inc. (USD) 4.45% 5/6/2050 (05/04/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.198, Yielding 4.5%.

Additional Commentary

NEW ISSUANCE WATCH: on 05/04/2020 participants welcome a $650MM new corporate-bond offering by New York Life Insurance Co.
Top Widening Loans Top Narrowing Loans
Aptean Inc. (USD) TL L+425 04/24/2026
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
Samsonite Intl. SA (USD) TLB L+175 04/19/2025
Panera Bread Co. (USD) TLA L+200 06/13/2022
Concordia International (USD) TL EXIT L+550 09/06/2024
Archroma Global Services (EUR) TLB1 E+400 07/11/2024
Hamilton Holdco LLC (USD) TLB L+200 01/02/2027
Rocket Software (USD) TL L+425 11/28/2025
Orion EngineeRed Carbons Hldgs GmbH (USD) TLB L+200 07/25/2024
Imperva Inc. (USD) TL2 L+775 01/10/2027

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 44 bp (basis points), as of 05/04/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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