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North American Bond Research – November 6, 2020

Posted on November 6, 2020
HIGH YIELD BOND RESEARCH
November 6, 2020
Bond Markets

GLOBAL MARKETS MIXED TO LOWER AS INVESTORS PAUSE TO CONTEMPLATE A PROBABLE BIDEN ADMINISTRATION. MARKETS ANTICIPATE HEAVY SPENDING BY A DEMOCRATIC ADMINISTRATION. 10 Year Treasury notes were up 5 bps. S&P -0.24%, Dow -0.03%, NASDAQ +0.04%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 49.6 MILLION+ CASES AND 1.25 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 10 MILLION+ CASES AND 243000+ 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
+   Dish DBS Corp. 5.875% 11/15/2024 +1.1%
  Goldman Sachs Group Inc. 5% PERP +1.3%
  Teva Pharmaceutical Industries LTD 2.8% 7/21/2023 +0.2%
  Dish DBS Corp. 7.75% 7/1/2026 +1.9%
  Continental Res Inc. 4.5% 4/15/2023 +0.3%
–   Teva Pharmaceutical Industries LTD 3.15% 10/1/2026 -0.3%
  Continental Resources Inc. 4.375% 1/15/2028 -0.1%
  Occidental Petroleum Corp. 2.9% 8/15/2024 -2.0%
  Ball Corp. 2.875% 8/15/2030 -0.4%
  Chubb INA Hldgs Inc. 1.375% 9/15/2030 -0.3%
Teva Pharmaceutical Industries LTD   3.15% 10/1/2026
Occidental Petroleum Corp.   2.9% 8/15/2024
Continental Resources Inc.   4.375% 1/15/2028
Ball Corp.   2.875% 8/15/2030
Pacific Gas & Electric Co.   3.45% 7/1/2025
Dish DBS Corp.   5.875% 11/15/2024
Chubb INA Hldgs Inc.   1.375% 9/15/2030
Micron Technology Inc.   4.975% 2/6/2026
Oasis Petroleum Inc.   6.875% 3/15/2022 (1)
Apache Corp.   4.375% 10/15/2028
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.42% 0.77% 0.99% 1.26% 6.41% 8.21%
Mining 0.84% 2.08% 11.37% 41.13% -8.52% -5.24%
Construction 0.40% 0.66% 1.27% 2.83% 6.78% 7.91%
Manufacturing 0.46% 1.18% 1.83% 2.15% 4.45% 7.09%
Transportion, Communication, Electric/Gas 0.40% 1.00% 3.41% 2.96% 4.68% 6.37%
Wholesale 0.24% 0.30% 0.34% -0.77% 2.23% 4.00%
Retail 0.45% 0.64% 1.34% 3.19% 3.31% 5.02%
Finance, Insurance, Real-Estate 0.26% 0.85% 1.35% 2.38% 3.89% 5.67%
Services 0.43% 1.35% 1.64% 2.30% 3.83% 5.28%
Public Administration 0.76% 0.95% 1.56% 3.28% 8.65% 10.72%
Energy 0.86% 2.05% 10.32% 35.12% -7.30% -3.50%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Antero Midstream Partners LP (USD) 7.875% 5/15/2026 144A (11/05/2020): 550MM Senior Unsecured Notes, Price at Issuance 100, Yielding 7.88%.

2. Antero Midstream Partners LP (USD) 7.875% 5/15/2026 Reg S (11/05/2020): 550MM Senior Unsecured Notes, Price at Issuance 100, Yielding 7.88%.

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

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

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

7. J.D. Power: $100MM incremental TL

8. Motorcity: $275MM TLB (Ba3/BB)

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

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

Additional Commentary

NEW ISSUANCE WATCH:    Antero Midstream Partners LP issued 550 MM in Notes. 
Top Widening Loans Top Narrowing Loans
CPV Shore LLC (USD) TLB L+375 12/27/2025
Penn Virginia Holding Corp. (USD) RC L+325 05/07/2024
Casper Bidco (EUR) TL E+850 07/30/2027
Endo Luxembourg Finance I Co. Sarl (USD) TLB L+425 04/27/2024
Promotora de Informaciones SA (EUR) TL3 E+400 12/31/2022
Playa Resorts Holding BV (USD) TLB L+325 04/27/2024
Quorum Health Corp. (USD) TL EXIT L+825 04/29/2025
Tutor Perini Corp. (USD) TLB L+475 08/14/2027
Bay Club Co. (USD) TL2 L+775 09/05/2026
Bay Club Co. (USD) TL L+375 09/05/2025

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 11/06/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
November 6, 2020
Bond Markets

GLOBAL MARKETS MIXED TO LOWER AS INVESTORS PAUSE TO CONTEMPLATE A PROBABLE BIDEN ADMINISTRATION. MARKETS ANTICIPATE HEAVY SPENDING BY A DEMOCRATIC ADMINISTRATION. 10 Year Treasury notes were up 5 bps. S&P -0.24%, Dow -0.03%, NASDAQ +0.04%
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 49.6 MILLION+ CASES AND 1.25 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 10 MILLION+ CASES AND 243000+ 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
+   American Intl Group Inc. 4.75% 4/1/2048 +0.9%
  Commonwealth Bank of Australia 2.85% 5/18/2026 +0.5%
  CVS Health Corp. 5.05% 3/25/2048 +0.4%
  Takeda Pharmaceutical Co. LTD 3.175% 7/9/2050 +0.2%
  Citigroup Inc. FLT% 4/25/2022 +0.2%
–   GE Capital Intl. Funding Co. 4.418% 11/15/2035 -0.0%
  Bristol-Myers Squibb Co. 4.25% 10/26/2049 -0.9%
  NextEra Energy Capital Holding Inc. 3.2% 2/25/2022 -0.2%
  AT&T Inc. 1.65% 2/1/2028 -0.9%
  MPLX LP 2.65% 8/15/2030 -0.6%
GE Capital Intl. Funding Co.   4.418% 11/15/2035
Bristol-Myers Squibb Co.   4.25% 10/26/2049
NextEra Energy Capital Holding Inc.   3.2% 2/25/2022
AT&T Inc.   1.65% 2/1/2028
Intel Corp.   4.75% 3/25/2050
MPLX LP   2.65% 8/15/2030
Lowe’s Companies Inc.   3% 10/15/2050
HCA Inc.   5.25% 6/15/2049
Boeing Co.   5.805% 5/1/2050
American Intl Group Inc.   4.75% 4/1/2048
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.54% 0.58% 1.28% -0.47% 6.42% 7.99%
Construction 0.60% 0.67% 1.71% 2.28% 7.63% 8.85%
Manufacturing 0.33% 0.54% 0.99% -0.22% 7.96% 9.00%
Transportion, Communication, Electric/Gas 0.61% 0.75% 1.38% -0.89% 9.29% 10.74%
Wholesale 0.22% 0.56% 1.28% 1.07% 7.83% 9.38%
Retail 0.41% 0.59% 1.20% -0.75% 9.36% 11.15%
Finance, Insurance, Real-Estate 0.21% 0.27% 0.81% 0.35% 6.79% 7.87%
Services 0.29% 0.41% 0.75% -0.19% 7.26% 8.27%
Public Administration 0.06% 0.05% 0.39% 0.06% 4.99% 5.26%
Energy 0.61% 0.64% 1.28% -0.79% 4.96% 6.89%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Waste Management Inc. (USD) 0.75% 11/15/2025 (11/05/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.829, Yielding .78%.

2. Waste Management Inc. (USD) 1.15% 3/15/2028 (11/05/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.937, Yielding 1.16%.

3. Waste Management Inc. (USD) 2.5% 11/15/2050 (11/05/2020): 500MM Senior Unsecured Notes, Price at Issuance 98.998, Yielding 2.55%.

4. Waste Management Inc. (USD) 1.5% 3/15/2031 (11/05/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.763, Yielding 1.52%.

5. Hyundai Capital America (USD) 1.15% 11/10/2022 (11/06/2020): 500MM Senior Unsecured Notes.

Additional Commentary

NEW ISSUANCE WATCH:   Waste Management Inc. Issued 2000 MM in notes.
Top Widening Loans Top Narrowing Loans
CPV Shore LLC (USD) TLB L+375 12/27/2025
Penn Virginia Holding Corp. (USD) RC L+325 05/07/2024
Casper Bidco (EUR) TL E+850 07/30/2027
Endo Luxembourg Finance I Co. Sarl (USD) TLB L+425 04/27/2024
Promotora de Informaciones SA (EUR) TL3 E+400 12/31/2022
Playa Resorts Holding BV (USD) TLB L+325 04/27/2024
Quorum Health Corp. (USD) TL EXIT L+825 04/29/2025
Tutor Perini Corp. (USD) TLB L+475 08/14/2027
Bay Club Co. (USD) TL2 L+775 09/05/2026
Bay Club Co. (USD) TL L+375 09/05/2025

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 11/06/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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