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North American Bond Research – November 3, 2020

Posted on November 3, 2020
HIGH YIELD BOND RESEARCH
November 3, 2020
Bond Markets

GLOBAL MARKETS LEAP UP FOR A SECOND DAY AS THE WORLD ANTICIPATE THAT THE DEMOCRATS WILL SWEEP THE PRESIDENCY AND BOTH HOUSES. WITH THAT VICTORY, THE MARKETS ANTICIPATE A HUGE STIMULUS BILL TO PASS. 10 Year Treasury notes were down 2 bps. S&P +2.06%, Dow +1.78%, NASDAQ +1.85%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 47.8 MILLION+ CASES AND 1.22 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 9.64 MILLION+ CASES AND 238000+ 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
+   CenterPoint Energy Inc. VAR% PERP +0.5%
  General Motors Co. 6.25% 10/2/2043 +1.1%
  Pacific Gas & Electric Co. 4.95% 7/1/2050 +1.1%
  General Motors Financial Co. Inc. 4.375% 9/25/2021 +0.3%
  Occidental Petroleum Corp. 2.9% 8/15/2024 +1.1%
–   T-Mobile USA Inc. 3.5% 4/15/2025 144A -0.0%
  Citigroup Inc. 5.95% PERP -0.1%
  Teva Pharmaceutical Industries LTD 2.8% 7/21/2023 -0.2%
  Range Resources Corp. 4.875% 5/15/2025 -0.0%
  Teva Pharmaceutical Industries LTD 3.15% 10/1/2026 -0.1%
CenterPoint Energy Inc.   VAR% PERP
General Motors Co.   6.25% 10/2/2043
Pacific Gas & Electric Co.   4.95% 7/1/2050
General Motors Financial Co. Inc.   4.375% 9/25/2021
Occidental Petroleum Corp.   2.9% 8/15/2024
Broadcom LTD   4.25% 4/15/2026
Antero Resources Corp.   5.625% 6/1/2023
Diamondback Energy Inc.   3.5% 12/1/2029
Cheniere Corpus Christi Hldgs LLC   5.875% 3/31/2025
Devon Energy Corp.   5.6% 7/15/2041
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.11% -0.21% 0.75% 0.58% 5.72% 7.30%
Mining -0.18% -1.98% 8.67% 43.81% -11.33% -7.95%
Construction 0.03% -0.57% 0.78% 2.53% 5.83% 6.79%
Manufacturing 0.00% -0.65% 0.88% 1.21% 3.20% 6.02%
Transportion, Communication, Electric/Gas -0.01% -0.66% 2.40% 2.01% 3.53% 5.33%
Wholesale -0.03% -0.76% 0.16% -0.29% 2.41% 4.15%
Retail -0.02% -0.96% 0.55% 2.67% 2.16% 3.88%
Finance, Insurance, Real-Estate -0.01% -0.40% 0.80% 1.88% 2.02% 3.84%
Services 0.01% -0.72% -0.25% 0.93% 2.55% 3.98%
Public Administration 0.20% -0.51% 0.77% 3.50% 7.61% 9.62%
Energy -0.13% -1.99% 7.88% 37.70% -9.86% -6.03%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Molina Healthcare Inc. (USD) 3.875% 11/15/2030 144A (11/02/2020): 650MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.88%.

2. Specialty Building Products Hldg LLC (USD) 6.375% 9/30/2026 (11/02/2020): 50MM Secured Notes, Price at Issuance 100.75, Yielding 6.22%.

3. Molina Healthcare Inc. (USD) 3.875% 11/15/2030 Reg S (11/02/2020): 650MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.88%.

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

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

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

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

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

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

4. J.D. Power: $100MM incremental TL

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

6. Motorcity: $275MM TLB (Ba3/BB)

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

8. J.D. Power: $100MM incremental TL

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

10. Motorcity: $275MM TLB (Ba3/BB)

Additional Commentary

NEW ISSUANCE WATCH:    Molina Healthcare Inc.  Inc issued 650 MM Notes.
Top Widening Loans Top Narrowing Loans
Stubhub (USD) TLB L+350 02/13/2027
Distributed Power Inc. (USD) TLB L+325 11/02/2025
NEP NCP Holdco Inc. (USD) TL L+325 10/10/2025
Lucid Energy Group LLC (USD) TLB2 L+300 02/19/2025
Conduent Business Services LLC (USD) TLA L+175 12/07/2022
Stena International SA (USD) TLB L+300 03/03/2021
Promotora de Informaciones SA (EUR) TL3 E+400 12/31/2022
Compass IV LTD (EUR) TLB E+450 05/09/2025
Conduent Business Services LLC (USD) TLB L+250 12/07/2023
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 14 bps (basis points), as of 11/03/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
November 3, 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 47.8 MILLION+ CASES AND 1.22 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 9.64 MILLION+ CASES AND 238000+ 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
+   General Electric Co. 4.35% 5/1/2050 +0.4%
  Lowe’s Companies Inc. 3% 10/15/2050 +0.1%
  CenterPoint Energy Inc. VAR% PERP +0.5%
  AT&T Inc. 3.65% 6/1/2051 +0.5%
  Apple Inc. 2.65% 5/11/2050 +0.2%
–   Boeing Co. 3.625% 2/1/2031 -0.5%
  Shell Intl. Finance BV 3.25% 5/11/2025 -0.1%
  Boeing Co. 5.93% 5/1/2060 -0.8%
  Bank of America Corp. VAR% 10/24/2031 -0.2%
  Comcast Corp. 3.4% 4/1/2030 -0.2%
Boeing Co.   3.625% 2/1/2031
Shell Intl. Finance BV   3.25% 5/11/2025
General Electric Co.   4.35% 5/1/2050
Boeing Co.   5.93% 5/1/2060
Bank of America Corp.   VAR% 10/24/2031
Comcast Corp.   3.4% 4/1/2030
Mondelez Intl Inc.   2.625% 9/4/2050
Lowe’s Companies Inc.   3% 10/15/2050
Boeing Co.   3.25% 2/1/2028
Boeing Co.   5.805% 5/1/2050
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.24% -0.54% -0.11% -1.19% 4.74% 5.49%
Construction -0.15% -0.45% 0.33% 0.94% 5.58% 6.05%
Manufacturing -0.22% -0.39% -0.17% -1.01% 7.02% 7.44%
Transportion, Communication, Electric/Gas -0.26% -0.46% -0.32% -2.10% 7.72% 8.18%
Wholesale -0.13% -0.15% 0.46% 0.46% 7.10% 8.10%
Retail -0.19% -0.38% -0.10% -1.56% 8.07% 8.90%
Finance, Insurance, Real-Estate -0.18% -0.21% 0.09% -0.19% 6.33% 6.95%
Services -0.15% -0.36% -0.19% -0.83% 6.50% 6.86%
Public Administration -0.22% -0.01% -0.26% -0.26% 4.56% 4.56%
Energy -0.22% -0.56% -0.20% -1.73% 3.44% 4.55%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]

(None Current 11/03/2020)
Additional Commentary

NEW ISSUANCE WATCH:  No New Issues.
Top Widening Loans Top Narrowing Loans
Stubhub (USD) TLB L+350 02/13/2027
Distributed Power Inc. (USD) TLB L+325 11/02/2025
NEP NCP Holdco Inc. (USD) TL L+325 10/10/2025
Lucid Energy Group LLC (USD) TLB2 L+300 02/19/2025
Conduent Business Services LLC (USD) TLA L+175 12/07/2022
Stena International SA (USD) TLB L+300 03/03/2021
Promotora de Informaciones SA (EUR) TL3 E+400 12/31/2022
Compass IV LTD (EUR) TLB E+450 05/09/2025
Conduent Business Services LLC (USD) TLB L+250 12/07/2023
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 14 bps (basis points), as of 11/03/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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