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North American Bond Research – November 17, 2020

Posted on November 17, 2020
HIGH YIELD BOND RESEARCH
November 17, 2020
Bond Markets

GLOBAL MARKETS GENERALLY LOWER AS THE SECOND COVID VACCINE GOOD NEWS WEARS OFF AND THE BLEAK HARSH REALITY OF SURGING CASES AND ECONOMIC HARDSHIP SET IN! 10 Year Treasury notes were down 3.1 bps. S&P -0.56%, Dow -0.48%, NASDAQ -0.21%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 55.775 MILLION+ CASES AND 1.34 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 11.6 MILLION+ CASES AND 254000+ 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
+   Pacific Gas & Electric Co. 4.55% 7/1/2030 +1.1%
  Pacific Gas & Electric Co. 4.95% 7/1/2050 +0.8%
  Federated Retail Hldg 6.375% 3/15/2037 +0.8%
  Macy’s Retail Hldg Inc. 5.125% 1/15/2042 +0.0%
  Nabors Industries Inc. 5.75% 2/1/2025 +8.7%
–   Crown Americas LLC 4.75% 2/1/2026 -0.1%
  Hilton Domestic Operating Co. 4.875% 1/15/2030 -0.1%
  Ford Motor Credit Co. 3.81% 1/9/2024 -0.1%
  Expedia Inc. 4.5% 8/15/2024 -0.6%
  JBS Investments GmbH 7% 1/15/2026 Reg S -0.5%
Pacific Gas & Electric Co.   4.55% 7/1/2030
Pacific Gas & Electric Co.   4.95% 7/1/2050
Federated Retail Hldg   6.375% 3/15/2037
Macy’s Retail Hldg Inc.   5.125% 1/15/2042
Nabors Industries Inc.   5.75% 2/1/2025
Crown Americas LLC   4.75% 2/1/2026
T-Mobile USA Inc.   6% 3/1/2023
Hilton Domestic Operating Co.   4.875% 1/15/2030
Ford Motor Credit Co.   3.81% 1/9/2024
General Motors Co.   4% 4/1/2025
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.04% 0.14% 1.01% 1.22% 6.77% 8.45%
Mining 0.07% 0.18% 4.48% 40.51% -7.02% -3.73%
Construction -0.03% -0.12% 0.61% 8.18% 7.34% 8.82%
Manufacturing -0.03% -0.13% 1.52% 2.94% 5.03% 7.28%
Transportion, Communication, Electric/Gas -0.05% -0.12% 1.05% 3.88% 5.35% 7.20%
Wholesale -0.09% 0.21% 0.35% -0.15% 2.53% 4.38%
Retail -0.10% -0.38% 1.13% 4.00% 4.28% 6.51%
Finance, Insurance, Real-Estate -0.01% 0.23% 1.70% 3.32% 4.68% 6.51%
Services -0.08% -0.18% 1.79% 3.44% 4.69% 6.38%
Public Administration 0.84% 1.32% 2.20% 4.12% 10.04% 12.08%
Energy 0.08% 0.32% 3.93% 34.38% -5.86% -2.09%
 
Total returns (non-annualized) by rating, market weighted.
New Issues Forward Calendar
1. Hilton Domestic Operating Co. (USD) 4% 5/1/2031 Reg S (11/16/2020): 1100MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4%.

2. Hilton Domestic Operating Co. (USD) 3.75% 5/1/2029 Reg S (11/16/2020): 800MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.75%.

3. Rackspace Technology Global Inc. (USD) 5.375% 12/1/2028 Reg S (11/16/2020): 550MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.38%.

4. Meritor Inc. (USD) 4.5% 12/15/2028 144A (11/16/2020): 275MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.5%.

5. GFL Environmental Inc. (USD) 4% 8/1/2028 144A (11/16/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.171, Yielding 4.13%.

6. Hilton Domestic Operating Co. (USD) 4% 5/1/2031 144A (11/16/2020): 1100MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4%.

7. Hilton Domestic Operating Co. (USD) 3.75% 5/1/2029 144A (11/16/2020): 800MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.75%.

8. Rackspace Technology Global Inc. (USD) 5.375% 12/1/2028 144A (11/16/2020): 550MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.38%.

9. Meritor Inc. (USD) 4.5% 12/15/2028 Reg S (11/16/2020): 275MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.5%.

10. GFL Environmental Inc. (USD) 4% 8/1/2028 Reg S (11/16/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.171, Yielding 4.13%.

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

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

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

4. Mattress Firm: $550MM (B1/B+)

5. Symplr Software Inc.: $930MM TLs: $680MM TL, $250MM TL

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

7. Smyrna Rady: $515MM senior secured notes (B1/)

8. Tervita: $500MM senior secured notes (B3/CCC+)

9. Tenneco: $500MM senior secured notes (Ba3/B)

10. Aston Martin: $840MM senior secured notes (Caa2/CCC)

Additional Commentary

NEW ISSUANCE WATCH:   Hilton Domestic Operating Co. issued 1100mm notes.
Top Widening Loans Top Narrowing Loans
Halcon Resources Corp. (USD) RC L+375 05/27/2021
Hurtigruten Group AS (EUR) TLC E+800 06/16/2023
Melissa & Doug LLC (USD) TL L+350 06/19/2024
Tritech Software Systems (USD) TL L+375 08/29/2025
ASP Chromaflo Intermediate Holdings Inc. (USD) TL L+800 11/18/2024
Concordia International (EUR) TL E+525 09/06/2024
Imagina Media Audiovisual SL (EUR) TLB E+450 06/28/2025
Imagina Media Audiovisual SL (EUR) TLB2 L+450 06/22/2025
Imagina Media Audiovisual SL (USD) TLA2 E+400 06/22/2025
Worldwide Express (USD) TL L+400 02/03/2024

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 11/17/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

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