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North American Bond Research – October 13, 2020

Posted on October 13, 2020
HIGH YIELD BOND RESEARCH
October 13, 2020
Bond Markets

GLOBAL MARKETS DOWN AS TWO COVID 19 THERAPUTICS AND VACCINE TRIALS PAUSED DUE TO SAFETY CONCERNS. MARKETS ARE ALSO CONCERNED ABOUT THE LACK OF PROGRESS CONCERNING STIMULUS RELIEF. 10 Year Treasury notes were up .2 bps. S&P -0.55%, Dow -0.63%, NASDAQ -0.10%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 38 MILLION+ CASES AND 1.08 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 7.95 MILLION+ CASES AND 219000+ 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
+   Cinemark Inc. 5.125% 12/15/2022 +0.3%
  BED Bath & Beyond Inc. 5.165% 8/1/2044 +0.3%
  Ford Motor Co. 9% 4/22/2025 +0.0%
  General Motors Co. 4.875% 10/2/2023 +0.1%
  Nabors Industries Inc. 5.75% 2/1/2025 +0.7%
–   Vale Overseas LTD 3.75% 7/8/2030 -0.1%
  Vale Overseas LTD 6.25% 8/10/2026 -0.2%
  MGM Resorts Intl 4.75% 10/15/2028 -0.1%
  Western Digital Corp. 4.75% 2/15/2026 -0.2%
  PulteGroup Inc. 5% 1/15/2027 -0.6%
Vale Overseas LTD   3.75% 7/8/2030
Mallinckrodt Intl. Finance SA   5.75% 8/1/2022 144A
Vale Overseas LTD   6.25% 8/10/2026
Pacific Gas & Electric Co.   4.95% 7/1/2050
MGM Resorts Intl   4.75% 10/15/2028
Cinemark Inc.   5.125% 12/15/2022
BED Bath & Beyond Inc.   5.165% 8/1/2044
Petrobras Global Finance BV   7.375% 1/17/2027
Ford Motor Co.   9% 4/22/2025
General Motors Co.   4.875% 10/2/2023
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.06% 0.57% 0.31% 3.68% 5.74% 7.82%
Mining 0.31% 0.97% 59.38% 125.20% -10.29% -6.32%
Construction 0.17% 0.85% 1.42% 5.85% 6.41% 8.33%
Manufacturing 0.21% 0.74% 1.20% 4.80% 3.26% 7.30%
Transportion, Communication, Electric/Gas 0.16% 0.55% 0.24% 3.25% 3.98% 5.87%
Wholesale 0.15% 0.60% 0.52% 2.91% 1.67% 4.40%
Retail 0.20% 0.82% 1.14% 7.48% 3.39% 6.02%
Finance, Insurance, Real-Estate 0.14% 0.48% 0.74% 5.02% 2.46% 5.29%
Services 0.13% 0.54% 0.16% 5.26% 3.06% 5.60%
Public Administration 0.29% 1.05% 0.92% 6.68% 8.33% 11.00%
Energy 0.30% 1.04% 52.33% 111.65% -8.75% -4.79%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 10/13/2020)
1. Wheelabrator Technologies Inc.: $1.3965B TLB

2. Fly Leasing LTD: $180MM TLB (Ba3/BBB-)

3. Maravai Lifesciences: $750MM credit facilities: $150MM revolver; $600MM TLB

4. Mega Broadband Investments Holdings LLC: $725MM credit facilities: $75MM revolver; $650MM TLB

5. Pae Holding Corp.: $890MM TLB (B2/B)

6. Quirch Foods LLC: $675MM credit facilities: $475MM TLB; $200MM revolver

7. Vander-Bend Manufacturing Inc.: $197.5MM credit facilities: $20MM revolver; $177.5MM TLB

8. Wheelabrator Technologies Inc.: $1.3965B TLB

9. Array Technologies: $575MM TLB (B1/B+)

10. Fly Leasing LTD: $180MM TLB (Ba3/BBB-)

Additional Commentary

NEW ISSUANCE WATCH:  No New Issues.
Top Widening Loans Top Narrowing Loans
Unifrax Corp. (USD) TL2 L+850 12/14/2026
Affinity Gaming LLC (USD) TL L+825 02/01/2025
Oxea GmbH (USD) TL L+350 09/29/2024
One Call Medical Inc. (USD) TL L+400 11/27/2020
Conduent Business Services LLC (USD) TLA L+175 12/07/2022
Akorn Inc. (USD) TL L+1250 04/16/2021
Owens & Minor Inc. (USD) TLA2 L+350 07/27/2022
Tacala LLC (USD) TLB L+350 02/05/2027
CSM Bakery (USD) TL L+1000 02/04/2022
MMM Holdings Inc. (USD) RC 11/01/2024

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 10/13/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
October 13, 2020
Bond Markets

GLOBAL MARKETS UP AS TRUMP AND THE DEMOCRATS GET MUCH CLOSER TO A DEAL. PRESIDENT TRUMP PROPOSED A $1.8 TRILLION DOLLAR PACKAGE TODAY. 10 Year Treasury notes were up .1 bps. S&P +0.88%, Dow +0.57%, NASDAQ +1.39%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 38 MILLION+ CASES AND 1.08 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 7.95 MILLION+ CASES AND 219000+ 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
+   Suzano Austria GmbH 6% 1/15/2029 +0.0%
  Omega Healthcare Investors Inc. 3.375% 2/1/2031 +0.0%
  Boeing Co. 4.508% 5/1/2023 +0.5%
  Lowe’s Companies Inc. 3% 10/15/2050 +0.0%
  Bank of America Corp. FLT% 3/5/2024 +0.0%
–   General Electric Co. 4.35% 5/1/2050 -0.3%
  Boeing Co. 5.805% 5/1/2050 -0.4%
  Vale Overseas LTD 3.75% 7/8/2030 -0.1%
  Microsoft Corp. 2.525% 6/1/2050 -0.0%
  Mizuho Financial Group Inc. VAR% 7/10/2031 -0.0%
General Electric Co.   4.35% 5/1/2050
Mizuho Financial Group Inc.   2.591% 5/25/2031
CVS Health Corp.   5.05% 3/25/2048
Boeing Co.   5.805% 5/1/2050
Anheuser-Busch Inbev Worldwide Inc.   4.9% 2/1/2046
Suzano Austria GmbH   6% 1/15/2029
Vale Overseas LTD   3.75% 7/8/2030
Omega Healthcare Investors Inc.   3.375% 2/1/2031
HSBC Hldg PLC   VAR% 6/4/2026
Gilead Sciences Inc.   2.6% 10/1/2040
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.16% 0.35% -0.37% 1.77% 5.46% 6.86%
Construction 0.27% 0.38% 1.34% 2.30% 5.88% 7.13%
Manufacturing 0.11% 0.19% 0.01% 1.01% 7.39% 8.65%
Transportion, Communication, Electric/Gas 0.25% 0.39% -0.27% 0.47% 8.34% 9.66%
Wholesale 0.13% 0.24% 0.20% 2.17% 7.50% 9.89%
Retail 0.12% 0.31% 0.11% 0.32% 8.44% 10.08%
Finance, Insurance, Real-Estate 0.07% 0.19% 0.07% 1.09% 6.38% 7.77%
Services 0.09% 0.19% -0.04% 0.90% 6.99% 7.94%
Public Administration 0.04% 0.03% 0.20% 0.43% 5.06% 4.79%
Energy 0.22% 0.46% -0.66% 1.18% 4.19% 6.07%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]

(None Current 10/13/2020)
Additional Commentary

NEW ISSUANCE WATCH:  No new issues.
Top Widening Loans Top Narrowing Loans
Unifrax Corp. (USD) TL2 L+850 12/14/2026
Affinity Gaming LLC (USD) TL L+825 02/01/2025
Oxea GmbH (USD) TL L+350 09/29/2024
One Call Medical Inc. (USD) TL L+400 11/27/2020
Conduent Business Services LLC (USD) TLA L+175 12/07/2022
Akorn Inc. (USD) TL L+1250 04/16/2021
Owens & Minor Inc. (USD) TLA2 L+350 07/27/2022
Tacala LLC (USD) TLB L+350 02/05/2027
CSM Bakery (USD) TL L+1000 02/04/2022
MMM Holdings Inc. (USD) RC 11/01/2024

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 10/13/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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