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North American Bond Research – November 13, 2020

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

GLOBAL MARKETS ARE MIXED TO UP AS THE CORONA VIRUS PICKS UP STEAM GLOBALLY. LOCK DOWNS IN EUROPE ARE TURNING THE TIDE BUT THE ECONOMIC IMPACT IS IMMENSE. 10 Year Treasury notes were down .8 bps. S&P +1.36%, Dow +1.37%, NASDAQ +1.02%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 53.6 MILLION+ CASES AND 1.31 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 11.1 MILLION+ CASES AND 250000+ 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
+   Intl Lease Finance Corp. 8.25% 12/15/2020 +0.3%
  Teva Pharmaceutical Industries LTD 2.8% 7/21/2023 +0.1%
  HCA Inc. 4.75% 5/1/2023 +0.2%
  TransDigm Inc. 6.375% 6/15/2026 +0.5%
  Centene Corp. 3.375% 2/15/2030 +0.6%
–   Micron Technology Inc. 4.185% 2/15/2027 -0.6%
  Sprint Nextel Corp. 7.875% 9/15/2023 -0.2%
  L Brands Inc. 6.875% 11/1/2035 -0.4%
  Chubb INA Hldgs Inc. 1.375% 9/15/2030 -0.3%
  Ford Motor Credit Co. 3.336% 3/18/2021 -0.1%
Intl Lease Finance Corp.   8.25% 12/15/2020
Micron Technology Inc.   4.185% 2/15/2027
Teva Pharmaceutical Industries LTD   2.8% 7/21/2023
HCA Inc.   4.75% 5/1/2023
Sprint Nextel Corp.   7.875% 9/15/2023
L Brands Inc.   6.875% 11/1/2035
TransDigm Inc.   6.375% 6/15/2026
Centene Corp.   3.375% 2/15/2030
Revlon Consumer Products Corp.   5.75% 2/15/2021
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 -0.04% 0.30% 0.95% 1.06% 6.86% 8.59%
Mining -0.15% 1.84% 3.42% 37.07% -6.03% -2.56%
Construction -0.11% 0.51% 1.00% 3.67% 7.52% 9.03%
Manufacturing -0.15% 0.68% 1.91% 2.90% 5.23% 7.80%
Transportion, Communication, Electric/Gas -0.14% 0.58% 3.49% 3.66% 5.36% 7.26%
Wholesale -0.15% 1.00% 0.12% -0.63% 1.67% 3.79%
Retail -0.18% 1.09% 1.64% 4.27% 4.99% 6.86%
Finance, Insurance, Real-Estate -0.11% 0.74% 2.09% 2.93% 4.71% 6.56%
Services -0.19% 1.12% 2.44% 3.35% 4.90% 6.36%
Public Administration 0.11% 0.59% 1.09% 2.89% 9.17% 11.23%
Energy -0.15% 1.96% 3.57% 31.68% -5.22% -1.26%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Interface Inc. (USD) 5.5% 12/1/2028 144A (11/12/2020): 300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.5%.

2. Sizzling Platter LLC (USD) 8.5% 11/28/2025 144A (11/12/2020): 350MM Secured Notes, Price at Issuance 100, Yielding 8.5%.

3. Chemours Co. LLC (USD) 5.75% 11/15/2028 144A (11/12/2020): 800MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.75%.

4. Interface Inc. (USD) 5.5% 12/1/2028 Reg S (11/12/2020): 300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.5%.

5. Chemours Co. LLC (USD) 5.75% 11/15/2028 Reg S (11/12/2020): 800MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.75%.

6. Sizzling Platter LLC (USD) 8.5% 11/28/2025 Reg S (11/12/2020): 350MM Secured Notes, Price at Issuance 100, Yielding 8.5%.

1. American Public Education Inc.: $195MM credit facilities: $20MM revolver; $175MM TLB

2. Amentum Holdings LLC: $980MM TL (B1/B)

3. Adtalem: $1.4B credit facilities: $400MM revolver; $1B TLB

4. Covis Group SARL: $485MM bank debt: $460MM secured TL; $25MM revolver

5. Amentum Holdings LLC: $980MM TL (B1/B)

6. American Public Education Inc.: $195MM credit facilities: $20MM revolver; $175MM TLB

7. Adtalem: $1.4B credit facilities: $400MM revolver; $1B TLB

8. Les Schwab Tire Centers: $1.575MM TLB (B2/B)

9. J.D. Power: $100MM incremental TL

10. Greystone Select Financial: $400MM TLB (Ba2/B+/BB-)

Additional Commentary

NEW ISSUANCE WATCH:   Interface Inc. issued 300MM in notes.
Top Widening Loans Top Narrowing Loans
Heidelberger Druckmaschinen AG (EUR) RC 03/27/2023
Compass IV LTD (EUR) TL E+800 05/09/2026
Jo-Ann Stores Inc. (USD) TL2 L+925 05/02/2024
Halcon Resources Corp. (USD) RC L+375 05/27/2021
Imagina Media Audiovisual SL (EUR) TLB E+450 06/28/2025
IMG Worldwide Inc. (USD) TLB2 12/31/2049
Aimbridge Hospitality LLC (USD) TLB L+375 02/01/2026
StandardAero (USD) TL L+350 04/08/2026
EG Group (EUR) TL E+775 03/23/2026
SnapAV (USD) TL L+475 08/04/2024

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 14 bps (basis points), as of 11/13/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
November 13, 2020
Bond Markets

GLOBAL MARKETS ARE MIXED TO UP AS THE CORONA VIRUS PICKS UP STEAM GLOBALLY. LOCK DOWNS IN EUROPE ARE TURNING THE TIDE BUT THE ECONOMIC IMPACT IS IMMENSE. 10 Year Treasury notes were down .8 bps. S&P +1.36%, Dow +1.37%, NASDAQ +1.02%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 53.6 MILLION+ CASES AND 1.31 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 11.1 MILLION+ CASES AND 250000+ 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
+   Verizon Communications Inc. 3% 11/20/2060 +0.6%
  Verizon Communications Inc. 2.875% 11/20/2050 +0.2%
  Verizon Communications Inc. 2.65% 11/20/2040 +0.0%
  Waste Management Inc. 2.5% 11/15/2050 +0.1%
  Bristol-Myers Squibb Co. 2.55% 11/13/2050 +0.0%
–   Bristol-Myers Squibb Co. 1.45% 11/13/2030 -0.2%
  Bristol-Myers Squibb Co. 2.9% 7/26/2024 -0.1%
  Verizon Communications Inc. 1.75% 1/20/2031 -0.0%
  Intercontinental Exchange Inc. 1.85% 9/15/2032 -0.0%
  Morgan Stanley 2.188% 4/28/2026 -0.2%
Verizon Communications Inc.   3% 11/20/2060
Verizon Communications Inc.   2.875% 11/20/2050
Verizon Communications Inc.   2.65% 11/20/2040
Waste Management Inc.   2.5% 11/15/2050
Bristol-Myers Squibb Co.   2.55% 11/13/2050
Bristol-Myers Squibb Co.   1.45% 11/13/2030
Alphabet Inc.   1.1% 8/15/2030
Bristol-Myers Squibb Co.   1.125% 11/13/2027
Morgan Stanley   VAR% 2/13/2032
Bristol-Myers Squibb Co.   2.35% 11/13/2040
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.01% -0.08% 1.00% -0.20% 6.24% 8.18%
Construction 0.08% -0.04% 1.56% 2.16% 6.80% 8.57%
Manufacturing -0.02% -0.32% 0.60% 0.01% 8.05% 9.45%
Transportion, Communication, Electric/Gas 0.04% -0.53% 0.72% -0.71% 8.85% 10.78%
Wholesale -0.08% -0.08% 1.15% 1.34% 8.62% 10.57%
Retail -0.02% -0.33% 0.72% -0.27% 9.18% 11.19%
Finance, Insurance, Real-Estate 0.01% -0.15% 0.59% 0.43% 6.95% 8.32%
Services 0.05% -0.30% 0.33% 0.02% 7.42% 8.77%
Public Administration 0.01% -0.14% -0.07% 0.01% 4.92% 5.37%
Energy 0.03% 0.17% 1.15% -0.45% 5.06% 7.35%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. JPMorgan Chase & Co. (USD) VAR% 11/19/2026 (11/12/2020): 2750MM Senior Unsecured Notes, Price at Issuance 100.

2. Pacific Gas & Electric Co. (USD) FLT% 11/15/2021 (11/12/2020): 1450MM First Lien Notes, Price at Issuance 100.

3. Procter & Gamble Co. (USD) FLT% 11/16/2070 (11/12/2020): 197MM Senior Unsecured Notes, Price at Issuance 100.

4. Principal Life Global Fund II (USD) 1.625% 11/19/2030 144A (11/12/2020): 300MM Secured Notes, Price at Issuance 99.972, Yielding 1.63%.

5. Equitable Financial Life (USD) 1.75% 11/15/2030 144A (11/12/2020): 300MM Secured Notes, Price at Issuance 99.745, Yielding 1.78%.

6. Equitable Financial Life (USD) 0.5% 11/17/2023 144A (11/12/2020): 500MM Secured Notes, Price at Issuance 99.86, Yielding .55%.

7. JPMorgan Chase & Co. (USD) VAR% 11/19/2031 (11/12/2020): 1400MM Senior Unsecured Notes, Price at Issuance 100.

8. JPMorgan Chase & Co. (USD) VAR% 11/19/2041 (11/12/2020): 1600MM Senior Unsecured Notes.

9. Saputo Inc. (CAD) 1.415% 6/19/2026 (11/12/2020): 350MM Senior Unsecured Notes, Price at Issuance 100, Yielding 1.42%.

10. Canadian Natural Resources LTD (CAD) 1.45% 11/16/2023 (11/12/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.886, Yielding 1.49%.

Additional Commentary

NEW ISSUANCE WATCH:   JPMorgan Chase & Co. sold $5700MM in notes.
Top Widening Loans Top Narrowing Loans
Heidelberger Druckmaschinen AG (EUR) RC 03/27/2023
Compass IV LTD (EUR) TL E+800 05/09/2026
Jo-Ann Stores Inc. (USD) TL2 L+925 05/02/2024
Halcon Resources Corp. (USD) RC L+375 05/27/2021
Imagina Media Audiovisual SL (EUR) TLB E+450 06/28/2025
IMG Worldwide Inc. (USD) TLB2 12/31/2049
Aimbridge Hospitality LLC (USD) TLB L+375 02/01/2026
StandardAero (USD) TL L+350 04/08/2026
EG Group (EUR) TL E+775 03/23/2026
SnapAV (USD) TL L+475 08/04/2024

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 14 bps (basis points), as of 11/13/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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