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North American Bond Research – November 27, 2020

Posted on November 27, 2020
HIGH YIELD BOND RESEARCH
November 27, 2020
Bond Markets

GLOBAL MARKETS WERE SLIGHTLY HIGHER IN LIGHT TRADING AS OPTIMISM IS RETURNING CONCERNING THE VIRUS VS. THE VACCINE EVEN THOUGH CASES ARE SOARING IN THE SHORT RUN. 10 Year Treasury notes were DOWN 4 bps. S&P +0.13%, Dow +0.24%, NASDAQ +0.91%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 61.78 MILLION+ CASES AND 1.45 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 13.3 MILLION+ CASES AND 270000+ 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. 3.85% 11/15/2023 +1.2%
  Lennar Corp. 4.5% 4/30/2024 +0.1%
  Service Properties Trust 5.5% 12/15/2027 +1.1%
  Firstenergy Corp. 7.375% 11/15/2031 +0.7%
  Kraft Heinz Co. 4.375% 6/1/2046 (2) +0.4%
–   Bank of Nova Scotia FLT% 9/15/2023 -0.1%
  Millicom Intl. Cellular SA 4.5% 4/27/2031 Reg S -0.3%
  Royal Bank of Scotland Group PLC 6% 12/19/2023 -0.3%
  Level 3 Financing Inc. 5.375% 5/1/2025 -0.0%
  Lennar Corp. 5.25% 6/1/2026 -0.1%
Bank of Nova Scotia   FLT% 9/15/2023
Pacific Gas & Electric Co.   3.85% 11/15/2023
Lennar Corp.   4.5% 4/30/2024
Millicom Intl. Cellular SA   4.5% 4/27/2031 Reg S
Royal Bank of Scotland Group PLC   6% 12/19/2023
Service Properties Trust   5.5% 12/15/2027
Level 3 Financing Inc.   5.375% 5/1/2025
Lennar Corp.   5.25% 6/1/2026
Firstenergy Corp.   7.375% 11/15/2031
Occidental Petroleum Corp.   3% 2/15/2027
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.06% 0.25% 1.27% 1.72% 6.92% 8.35%
Mining 0.32% 1.45% 6.29% 50.27% -5.33% -1.92%
Construction 0.03% 0.36% 1.54% 4.09% 8.90% 10.13%
Manufacturing 0.01% 0.48% 2.25% 3.86% 6.17% 8.20%
Transportion, Communication, Electric/Gas -0.02% 0.27% 1.70% 4.39% 6.08% 7.81%
Wholesale 0.03% 0.41% 1.78% 1.73% 5.04% 7.01%
Retail 0.04% 0.60% 1.74% 4.45% 6.20% 8.70%
Finance, Insurance, Real-Estate -0.03% 0.24% 1.94% 3.25% 5.74% 7.35%
Services 0.02% 0.41% 2.99% 3.76% 5.63% 7.85%
Public Administration -0.16% 0.22% 0.90% 2.99% 9.22% 10.96%
Energy 0.31% 1.60% 6.19% 44.08% -3.55% 0.44%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 11/27/2020)
1. Adtalem: $1.4B credit facilities: $400MM revolver; $1B TLB

2. American Bath Group LLC: $1.2B TL (B2/B)

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

4. Astoria Energy LLC: $800MM TLB (Ba3)

5. Railworks: $280MM credit facilities: $230MM TLB; $50MM revolver

6. Smartbear: $565MM credit facilities: $50MM revolver (B2/B-); $385MM TL (B2/B-); $130MM TL

7. Sinclair: $550MM senior secured notes

8. American Bath: $335MM senior unsecured notes (Caa2/CCC+)

9. Carnival: $1000MM senior unsecured notes (B2/B)

10. Double Eagle: $650MM senior unsecured notes (B3/B)

Additional Commentary

NEW ISSUANCE WATCH: No New Issues.
Top Widening Loans Top Narrowing Loans
Assystem (EUR) TLB E+425 09/28/2024
Ahlsell AB (EUR) TL E+825 03/01/2027
Melissa & Doug LLC (USD) TL L+350 06/19/2024
Koninklijke Ten Cate NV (USD) TLB2 L+325 01/27/2023
NCL Corp. LTD (USD) TLA L+150 01/02/2024
TMF Group Hldg B.V. (EUR) TL2 E+687.5 06/08/2026
American Tire Distributors Inc. (USD) TL DIP PIK L+750 09/01/2024
Lakeland Tours LLC (USD) TL EXIT L+600 09/25/2025
Pfleiderer AG (EUR) TLB E+500 04/13/2024
Tecomet Inc. (USD) TL L+350 05/01/2024

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 11/27/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
November 27, 2020
Bond Markets

GLOBAL MARKETS WERE MIXXED TO HIGHER AS MORE VACCINES ARE SHOWING HIGH EFFECTIENCIES. THE LOCK DOWN IN EUROPE IS SHOWING PROMISE, BUT IN THE US MORE STATES ARE SHUTTING DOWN. 10 Year Treasury notes were UP 2.5 bps. S&P +1.62%, Dow +1.54%, NASDAQ +1.31%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 61.78 MILLION+ CASES AND 1.45 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 13.3 MILLION+ CASES AND 270000+ 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
+   Ford Motor Credit Co. 5.875% 8/2/2021 +0.1%
  Intercontinental Exchange Inc. 3.75% 9/21/2028 +0.4%
  Verizon Communications Inc. 2.875% 11/20/2050 +0.6%
  JPMorgan Chase & Co. VAR% 11/19/2026 +0.5%
  IBM Corp. 4.25% 5/15/2049 +1.5%
–   HSBC Hldg PLC VAR% 5/24/2027 -0.0%
  Walt Disney Co. 1.75% 8/30/2024 -0.4%
  Ford Motor Credit Co. 4% 11/13/2030 -0.6%
  CNH Industrial NV 4.5% 8/15/2023 -0.1%
  Constellation Brands Inc. 3.5% 5/9/2027 -0.2%
HSBC Hldg PLC   VAR% 5/24/2027
Walt Disney Co.   1.75% 8/30/2024
Ford Motor Credit Co.   5.875% 8/2/2021
Intercontinental Exchange Inc.   3.75% 9/21/2028
Verizon Communications Inc.   2.875% 11/20/2050
JPMorgan Chase & Co.   VAR% 11/19/2026
IBM Corp.   4.25% 5/15/2049
JPMorgan Chase & Co.   2.083% 4/22/2026
Barclays PLC   4.337% 1/10/2028
Anheuser-Busch Inbev Worldwide Inc.   4.9% 2/1/2046
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.08% 0.74% 2.44% 1.61% 7.87% 8.74%
Construction -0.05% 0.51% 2.37% 3.64% 8.34% 8.71%
Manufacturing -0.14% 0.31% 1.56% 1.54% 9.10% 9.58%
Transportion, Communication, Electric/Gas -0.19% 0.46% 2.17% 1.43% 10.42% 10.79%
Wholesale -0.11% 0.31% 1.60% 2.38% 9.43% 10.13%
Retail -0.16% 0.32% 1.76% 1.63% 10.65% 11.16%
Finance, Insurance, Real-Estate -0.12% 0.22% 1.21% 1.34% 7.84% 8.35%
Services -0.17% 0.27% 1.37% 1.41% 8.36% 8.70%
Public Administration 0.02% 0.07% 0.08% 0.07% 5.07% 5.10%
Energy -0.07% 0.76% 2.70% 1.57% 6.70% 8.04%
 
Total returns (non-annualized) by rating, market weighted.
New Issues New Issues [Continued]

(None Current 11/27/2020)
Additional Commentary

NEW ISSUANCE WATCH:     No New Issues.
Top Widening Loans Top Narrowing Loans
Assystem (EUR) TLB E+425 09/28/2024
Ahlsell AB (EUR) TL E+825 03/01/2027
Melissa & Doug LLC (USD) TL L+350 06/19/2024
Koninklijke Ten Cate NV (USD) TLB2 L+325 01/27/2023
NCL Corp. LTD (USD) TLA L+150 01/02/2024
TMF Group Hldg B.V. (EUR) TL2 E+687.5 06/08/2026
American Tire Distributors Inc. (USD) TL DIP PIK L+750 09/01/2024
Lakeland Tours LLC (USD) TL EXIT L+600 09/25/2025
Pfleiderer AG (EUR) TLB E+500 04/13/2024
Tecomet Inc. (USD) TL L+350 05/01/2024

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 11/27/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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