EUROPEAN MARKETS WERE UP WHILE US MARKETS WERE DOWN AS PRESIDENT TRUMP ANNOUNCES THAT HE AND HIS WIFE HAVE COVID. ONLY 660K JOBS WERE ADDED IN SEPTEMBER, ALSO BELOW CONSENSUS FORCAST. 10 Year Treasury notes were up 1.9 bps. S&P -0.96%, Dow -0.48%, NASDAQ -2.22%.
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Market Summaries
North American Bond Research – October 2, 2020
Posted on October 2, 2020|
HIGH YIELD BOND RESEARCH
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October 2, 2020
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Bond Markets
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 34.8 MILLION+ CASES AND 1.03 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 7.6 MILLION+ CASES AND 213000+ 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 | ||||||||||||||||||||||||||||||
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Pacific Gas & Electric Co. 4.95% 7/1/2050 Broadcom LTD 4.3% 11/15/2032 T-Mobile USA Inc. 3.75% 4/15/2027 144A Vale Overseas LTD 3.75% 7/8/2030 T-Mobile USA Inc. 3.875% 4/15/2030 144A Communications Sales & Leasing Inc. 8.25% 10/15/2023 BED Bath & Beyond Inc. 5.165% 8/1/2044 Newfield Exploration Co. 5.375% 1/1/2026 Frontier Communications Corp. 6.86% 2/1/2028 Petrobras Global Finance BV 8.75% 5/23/2026 |
| Industry Returns Tracker | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| New Issues | Forward Calendar |
|---|---|
| 1. Cedar Fair LP (USD) 6.5% 10/1/2028 144A (10/01/2020): 300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.5%.
2. Cedar Fair LP (USD) 6.5% 10/1/2028 Reg S (10/01/2020): 300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.5%. 3. Frontier Communications Corp. (USD) 5.875% 10/15/2027 Reg S (10/01/2020): 1150MM First Lien Notes, Price at Issuance 100, Yielding 5.88%. 4. Central Garden & Pet Co. (USD) 4.125% 10/15/2030 (10/01/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.13%. 5. Frontier Communications Corp. (USD) 5.875% 10/15/2027 144A (10/01/2020): 1150MM First Lien Notes, Price at Issuance 100, Yielding 5.88%. |
1. Vander-Bend Manufacturing Inc.: $197.5MM credit facilities: $20MM revolver; $177.5MM TLB
2. Quirch Foods LLC: $675MM credit facilities: $475MM TLB; $200MM revolver 3. Pae Holding Corp.: $890MM TLB (B2/B) 4. Global Medical Response: $1.5B TL (B1/B) 5. Array Residential Services: $575MM TLB (B1/B+) 6. American Residential Services: $470MM TLB (B1/B) 7. Wheelabrator Technologies Inc.: $1.3965B TLB 8. Vander-Bend Manufacturing Inc.: $197.5MM credit facilities: $20MM revolver; $177.5MM TLB 9. Pae Holding Corp.: $890MM TLB (B2/B) 10. Global Medical Response: $1.5B TL (B1/B) |
Additional Commentary
NEW ISSUANCE WATCH: Cedar Fair LP issued 300MM of Notes.
| Top Widening Loans | Top Narrowing Loans |
| NCL Corp. LTD (USD) TLA L+150 01/02/2024 BBB Industries LLC (USD) TL2 L+825 08/01/2026 Tritech Software Systems (USD) TL2 L+750 08/31/2026 Mattress Firm (USD) TL EXIT 11/21/2022 Royal Caribbean Cruises LTD (USD) RC L+130 04/05/2024 |
JC Penney Co. Inc. (USD) DD L+1175 11/15/2020 Grosvenor Capital Mgmt Hldg LLP (USD) TLB L+275 03/29/2025 TCW Group (USD) TLB L+175 12/27/2024 EG Group (USD) TLB L+400 02/06/2025 Tacala LLC (USD) TLB L+350 02/05/2027 |
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 15 bps (basis points), as of 10/02/2020
- Net negative capital flows into high-yield ETFs & mutual funds
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INVESTMENT GRADE BOND RESEARCH
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October 2, 2020
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Bond Markets
EUROPEAN MARKETS WERE UP WHILE US MARKETS WERE DOWN AS PRESIDENT TRUMP ANNOUNCES THAT HE AND HIS WIFE HAVE COVID. ONLY 660K JOBS WERE ADDED IN SEPTEMBER, ALSO BELOW CONSENSUS FORCAST. 10 Year Treasury notes were up 1.9 bps. S&P -0.96%, Dow -0.48%, NASDAQ -2.22%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 34.8 MILLION+ CASES AND 1.03 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 7.6 MILLION+ CASES AND 213000+ 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 | ||||||||||||||||||||||||||||||
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Boeing Co. 5.805% 5/1/2050 Mondelez Intl Inc. 2.625% 9/4/2050 Suzano Austria GmbH 3.75% 1/15/2031 Caterpillar Financial Services Corp. 2.65% 5/17/2021 Pacific Gas & Electric Co. 4.95% 7/1/2050 Host Hotels & Resorts LP 3.375% 12/15/2029 Broadcom LTD 4.3% 11/15/2032 Citizens Bank NA 2.25% 10/30/2020 Hasbro Inc. 3.55% 11/19/2026 Goldman Sachs Group Inc. VAR% 4/23/2029 |
| Industry Returns Tracker | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| New Issues | New Issues [Continued] |
|---|---|
| 1. Union Electric Co. (USD) 2.625% 3/15/2051 (10/01/2020): 550MM First Lien Notes, Price at Issuance 99.522, Yielding 2.65%.
2. New England Power Co. (USD) 2.807% 10/6/2050 144A (10/01/2020): 400MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.81%. 3. First Mid Bancshares Inc. (USD) VAR% 10/15/2030 (10/01/2020): 96MM Subordinated Notes, Price at Issuance 100. 4. New England Power Co. (USD) 2.807% 10/6/2050 Reg S (10/01/2020): 400MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.81%. 5. Stantec Inc. (CAD) 2.048% 10/8/2027 (10/01/2020): 300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.05%. 6. Peacehealth Obligated Group (USD) 3.218% 11/15/2050 (10/01/2020): 403MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.22%. 7. Signature Bank New York (USD) VAR% 10/15/2030 (10/01/2020): 375MM Subordinated Notes, Price at Issuance 100. 8. Peacehealth Obligated Group (USD) 1.375% 11/15/2025 (10/01/2020): 338MM Senior Unsecured Notes, Price at Issuance 100, Yielding 1.38%. |
Additional Commentary
NEW ISSUANCE WATCH: Union Electric Co. issued 550MM in notes.
| Top Widening Loans | Top Narrowing Loans |
| NCL Corp. LTD (USD) TLA L+150 01/02/2024 BBB Industries LLC (USD) TL2 L+825 08/01/2026 Tritech Software Systems (USD) TL2 L+750 08/31/2026 Mattress Firm (USD) TL EXIT 11/21/2022 Royal Caribbean Cruises LTD (USD) RC L+130 04/05/2024 |
JC Penney Co. Inc. (USD) DD L+1175 11/15/2020 Grosvenor Capital Mgmt Hldg LLP (USD) TLB L+275 03/29/2025 TCW Group (USD) TLB L+175 12/27/2024 EG Group (USD) TLB L+400 02/06/2025 Tacala LLC (USD) TLB L+350 02/05/2027 |
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 15 bps (basis points), as of 10/02/2020
- Net positive capital flows into high-yield ETFs & mutual funds
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