STOCKS ARE UP AS STATES AND COUNTRIES OPEN UP. OIL UP TO 24.5 A BARREL. AMEX AND SEVERAL OIL COMPANIES EXPECTED TO RELEASE EARNINGS TODAY. FTSE 100 +1.66%, 10 Year Treasury notes were up 2 basis points. S&P +0.9%, Dow +0.56%, NASDAQ +1.13%.
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Market Summaries
North American Bond Research – May 5, 2020
Posted on May 5, 2020|
HIGH YIELD BOND RESEARCH
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May 5, 2020
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Bond Markets
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 3.7 MILLION+ CASES AND 258000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 1.23 MILLION+ CASES AND 72000+ 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 | ||||||||||||||||||||||||||||||
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General Motors Co. 5.2% 4/1/2045 Occidental Petroleum Corp. 2.7% 8/15/2022 Ford Motor Co. 9% 4/22/2025 Occidental Petroleum Corp. 2.9% 8/15/2024 Sabine Pass Liquefaction LLC 5.625% 3/1/2025 Micron Technology Inc. 4.663% 2/15/2030 Ford Motor Co. 8.5% 4/21/2023 Ally Financial Inc. 4.25% 4/15/2021 Hertz Corp. 6.25% 10/15/2022 Petrobras Global Finance BV 7.375% 1/17/2027 |
| Industry Returns Tracker | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| New Issues | Forward Calendar |
|---|---|
| 1. Kraft Heinz Co (USD) 3.875% 5/15/2027 144A (05/04/2020): 1350MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.88%.
2. NFP Corp. (USD) 7% 5/15/2025 144A (05/04/2020): 300MM Secured Notes, Price at Issuance 100, Yielding 7%. 3. Mauser Packaging Solutions Hldg Co. (USD) 8.5% 4/15/2024 144A (05/04/2020): 150MM First Lien Notes, Price at Issuance 99, Yielding 8.8%. 4. NFP Corp. (USD) 7% 5/15/2025 Reg S (05/04/2020): 300MM Secured Notes, Price at Issuance 100, Yielding 7%. 5. Avis Budget Finance PLC (USD) 10.5% 5/15/2025 144A (05/05/2020): 500MM Secured Notes, Price at Issuance 97, Yielding 11.3%. 6. Avis Budget Finance PLC (USD) 10.5% 5/15/2025 Reg S (05/05/2020): 500MM Secured Notes, Price at Issuance 97, Yielding 11.3%. |
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: Kraft Heinz issued 1350 MM in Notes.
| Top Widening Loans | Top Narrowing Loans |
| Forest City Enterprises Inc. (USD) TLB L+350 12/08/2025 GGP Inc. (USD) TLA2 L+250 08/24/2023 KIK Custom Products Inc. (USD) TLB L+400 05/15/2023 Coty Inc. (EUR) TLA E+175 04/05/2023 EnQuest PLC (USD) RCB L+475 10/01/2021 |
Orion EngineeRed Carbons Hldgs GmbH (USD) TLB L+200 07/25/2024 Caesars Entertainment Inc. (USD) TL L+200 10/06/2024 Diaverum AB (EUR) TLB L+325 05/26/2024 Concordia International (USD) TL EXIT L+550 09/06/2024 Albany Molecular Research (USD) TL2 L+700 07/28/2025 |
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 40 bp (basis points), as of 05/05/2020
- Net negative capital flows into high-yield ETFs & mutual funds
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INVESTMENT GRADE BOND RESEARCH
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May 5, 2020
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Bond Markets
STOCKS ARE UP AS STATES AND COUNTRIES OPEN UP. OIL UP TO 24.5 A BARREL. AMEX AND SEVERAL OIL COMPANIES EXPECTED TO RELEASE EARNINGS TODAY. FTSE 100 +1.66%, 10 Year Treasury notes were up 2 basis points. S&P +0.9%, Dow +0.56%, NASDAQ +1.13%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 3.7 MILLION+ CASES AND 258000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 1.23 MILLION+ CASES AND 72000+ 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 Boeing Co. 5.805% 5/1/2050 Boeing Co. 5.93% 5/1/2060 Boeing Co. 4.875% 5/1/2025 Wells Fargo & Co. 5.013% 4/4/2051 Boeing Co. 4.508% 5/1/2023 Southwest Airlines Co. 5.25% 5/4/2025 Boeing Co. 5.705% 5/1/2040 Goldman Sachs Group Inc. 3.5% 4/1/2025 Citigroup Inc. 4.412% 3/31/2031 |
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| 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) 3.5% 11/15/2050 (05/04/2020): 1250MM Senior Unsecured Notes, Price at Issuance 99.33, Yielding 3.54%. 9. 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 05/05/2020 participants welcome a $1250MM new corporate-bond offering by Teachers Insurance & Annuity Assoc.
| Top Widening Loans | Top Narrowing Loans |
| Forest City Enterprises Inc. (USD) TLB L+350 12/08/2025 GGP Inc. (USD) TLA2 L+250 08/24/2023 KIK Custom Products Inc. (USD) TLB L+400 05/15/2023 Coty Inc. (EUR) TLA E+175 04/05/2023 EnQuest PLC (USD) RCB L+475 10/01/2021 |
Orion EngineeRed Carbons Hldgs GmbH (USD) TLB L+200 07/25/2024 Caesars Entertainment Inc. (USD) TL L+200 10/06/2024 Diaverum AB (EUR) TLB L+325 05/26/2024 Concordia International (USD) TL EXIT L+550 09/06/2024 Albany Molecular Research (USD) TL2 L+700 07/28/2025 |
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 40 bp (basis points), as of 05/05/2020
- Net positive capital flows into high-yield ETFs & mutual funds
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