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North American Bond Research – November 2, 2020

Posted on November 2, 2020
HIGH YIELD BOND RESEARCH
November 2, 2020
Bond Markets

GLOBAL MARKETS SNAP BACK FROM LAST WEEKS LOSSES. OIL LED THE WAY AS OPEC AND RUSSIA ARE HOLDING OFF A PLANNED INCREASE IN CRUDE OUTPUT. 10 Year Treasury notes were down 2 bps. S&P +1.62%, Dow +1.23%, NASDAQ +0.42%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 47.3 MILLION+ CASES AND 1.21 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 9.6 MILLION+ CASES AND 237000+ 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. 4.95% 7/1/2050 +0.9%
  EIG Investors Corp. 10.875% 2/1/2024 +0.8%
  FirstEnergy Corp. 4.25% 3/15/2023 +0.1%
  Pacific Gas & Electric Co. 4.55% 7/1/2030 +0.3%
  Antero Resources Corp. 5% 3/1/2025 +1.7%
–   Delta Airlines Inc. 3.625% 3/15/2022 -0.3%
  Ford Motor Credit Co. 3.2% 1/15/2021 -0.1%
  HCA Inc. 5.375% 2/1/2025 -0.4%
  General Motors Financial Co. Inc. 4.375% 9/25/2021 -0.3%
  GEO Group 5.125% 4/1/2023 -1.8%
Pacific Gas & Electric Co.   4.95% 7/1/2050
EIG Investors Corp.   10.875% 2/1/2024
FirstEnergy Corp.   4.25% 3/15/2023
EQT Corp.   5% 1/15/2029
Pacific Gas & Electric Co.   4.55% 7/1/2030
Antero Resources Corp.   5% 3/1/2025
Diamondback Energy Inc.   3.5% 12/1/2029
EQT Corp.   3.9% 10/1/2027
The Escrow Corp. III   4.625% 7/15/2024
Delta Airlines Inc.   3.625% 3/15/2022
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.03% -0.28% 0.83% 0.44% 5.64% 7.50%
Mining -0.49% -1.66% 73.79% 34.83% -10.84% -7.28%
Construction -0.16% -0.69% 1.08% 2.74% 5.86% 6.93%
Manufacturing -0.20% -0.78% 0.78% 1.11% 3.33% 5.98%
Transportion, Communication, Electric/Gas -0.24% -0.75% 2.38% 2.17% 3.34% 5.27%
Wholesale -0.26% -1.00% 0.08% -0.42% 1.72% 3.71%
Retail -0.30% -0.93% 1.02% 3.17% 2.88% 4.96%
Finance, Insurance, Real-Estate -0.18% -0.57% 0.83% 2.50% 2.55% 4.41%
Services -0.18% -0.82% 0.30% 1.92% 3.29% 5.13%
Public Administration -0.17% -0.70% 0.68% 3.60% 7.46% 9.31%
Energy -0.47% -1.81% 65.11% 30.42% -9.46% -5.49%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Residential RE 2020 LTD (USD) FLT% 12/6/2024 (11/02/2020): 200MM Unsecured Notes, Price at Issuance 100.

2. Residential RE 2020 LTD (USD) 0% 12/6/2024 (11/02/2020): 50MM Unsecured Notes, Price at Issuance 74, Yielding 7.49%.

3. Residential RE 2020 LTD (USD) FLT% 12/6/2024 (11/02/2020): 150MM Unsecured Notes, Price at Issuance 100.

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

2. J.D. Power: $100MM incremental TL

3. Park Place Technologies LLC: $1.155B: $80MM revolver; $845MM TL (B2/B-); $230MM TL (Caa2/CCC)

4. Motorcity: $275MM TLB (Ba3/BB)

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

6. PetSmart: $1150MM senior unsecured notes (Caa1/CCC+)

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

8. PetSmart: $1200MM senior secured notes (B1/B)

9. LABL Inter: $500MM senior PIK toggle (/B-)

10. Sizzling Platter: $325MM senior secured notes (B3/)

Additional Commentary

NEW ISSUANCE WATCH:    Residential RE 2020 LTD  Inc issued 400 MM Notes.
Top Widening Loans Top Narrowing Loans
CPM Holdings Inc. (USD) TL2 L+825 11/16/2026
Burlington Coat Factory Warehouse Corp. (USD) TLB L+175 11/17/2024
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
Lucid Energy Group LLC (USD) TLB2 L+300 02/19/2025
CSM Bakery (USD) TL L+1000 02/04/2022
EG Group (EUR) TL E+775 03/23/2026
Tritech Software Systems (USD) TL2 L+750 08/31/2026
Cvent Inc. (USD) TL L+375 11/02/2024
Truck Hero Inc (USD) TL2 L+825 04/24/2025
Quorum Health Corp. (USD) TL EXIT L+825 04/29/2025

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 13 bps (basis points), as of 11/02/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
November 2, 2020
Bond Markets

GLOBAL MARKETS SNAP BACK FROM LAST WEEKS LOSSES. OIL LED THE WAY AS OPEC AND RUSSIA ARE HOLDING OFF A PLANNED INCREASE IN CRUDE OUTPUT. 10 Year Treasury notes were down 2 bps. S&P +1.62%, Dow +1.23%, NASDAQ +0.42%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 47.3 MILLION+ CASES AND 1.21 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 9.6 MILLION+ CASES AND 237000+ 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
+   Boeing Co. 3.625% 2/1/2031 +0.3%
  Bank of America Corp. VAR% 10/24/2031 +0.1%
  FirstEnergy Corp. 3.4% 3/1/2050 +2.6%
  Spirit Realty LP 3.4% 1/15/2030 +0.5%
  AT&T Inc. 5.45% 3/1/2047 +0.8%
–   Boeing Co. 1.95% 2/1/2024 -0.1%
  Shell Intl. Finance BV 3.25% 5/11/2025 -0.1%
  Boeing Co. 2.75% 2/1/2026 -0.6%
  Boeing Co. 5.15% 5/1/2030 -0.0%
  AT&T Inc. 3.3% 2/1/2052 -1.9%
Boeing Co.   3.625% 2/1/2031
Bank of America Corp.   VAR% 10/24/2031
FirstEnergy Corp.   3.4% 3/1/2050
Boeing Co.   1.95% 2/1/2024
Spirit Realty LP   3.4% 1/15/2030
Shell Intl. Finance BV   3.25% 5/11/2025
AT&T Inc.   5.45% 3/1/2047
Procter & Gamble Co.   1.2% 10/29/2030
Boeing Co.   2.75% 2/1/2026
Boeing Co.   5.15% 5/1/2030
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.38% -0.18% -0.04% -1.01% 5.18% 6.41%
Construction -0.27% -0.00% 0.46% 1.45% 6.16% 7.18%
Manufacturing -0.30% -0.14% -0.10% -0.79% 7.25% 8.26%
Transportion, Communication, Electric/Gas -0.45% -0.06% -0.32% -1.86% 7.97% 9.13%
Wholesale -0.28% -0.12% 0.38% 0.54% 7.56% 9.21%
Retail -0.35% -0.15% -0.10% -1.31% 8.10% 9.59%
Finance, Insurance, Real-Estate -0.23% -0.02% 0.18% 0.01% 6.47% 7.55%
Services -0.29% -0.12% -0.18% -0.58% 6.53% 7.36%
Public Administration -0.04% 0.00% -0.11% -0.03% 4.97% 5.19%
Energy -0.40% -0.25% -0.17% -1.44% 3.82% 5.44%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
 

 

(None Current 11/02/2020)
Additional Commentary

NEW ISSUANCE WATCH:  No New Issues.
Top Widening Loans Top Narrowing Loans
CPM Holdings Inc. (USD) TL2 L+825 11/16/2026
Burlington Coat Factory Warehouse Corp. (USD) TLB L+175 11/17/2024
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
Lucid Energy Group LLC (USD) TLB2 L+300 02/19/2025
CSM Bakery (USD) TL L+1000 02/04/2022
EG Group (EUR) TL E+775 03/23/2026
Tritech Software Systems (USD) TL2 L+750 08/31/2026
Cvent Inc. (USD) TL L+375 11/02/2024
Truck Hero Inc (USD) TL2 L+825 04/24/2025
Quorum Health Corp. (USD) TL EXIT L+825 04/29/2025

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 13 bps (basis points), as of 11/02/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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