GLOBAL MARKETS MIXED TO UP AS OPTIMISM OF SOME SORT OF STIMULUS DEAL IS APPROACHING NEAR. SOME VACCINE AND THERAPEUTICS HAVE BEEN TERMINATED BUT THE ONES THAT REMAIN ARE PROGRESSING. 10 Year Treasury notes were up 3.6 bps. S&P +0.47%, Dow +0.40%, NASDAQ +0.33%.
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Market Summaries
North American Bond Research – October 20, 2020
Posted on October 20, 2020|
HIGH YIELD BOND RESEARCH
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October 20, 2020
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Bond Markets
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 41 MILLION+ CASES AND 1.13 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 8.5 MILLION+ CASES AND 226000+ 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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T-Mobile USA Inc. 3.75% 4/15/2027 144A T-Mobile USA Inc. 3.875% 4/15/2030 144A Diamondback Energy Inc. 3.5% 12/1/2029 Occidental Petroleum Corp. 3.4% 4/15/2026 Millicom Intl. Cellular SA 4.5% 4/27/2031 Reg S Broadcom LTD 4.75% 4/15/2029 Broadcom LTD 4.11% 9/15/2028 Vale Overseas LTD 6.25% 8/10/2026 Centene Corp. 3% 10/15/2030 T-Mobile USA Inc. 3.5% 4/15/2025 144A |
| Industry Returns Tracker | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| New Issues | Forward Calendar |
|---|---|
| 1. Starwood Property Trust Inc. (USD) 5.5% 11/1/2023 144A (10/19/2020): 300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.5%.
2. Chobani LLC (USD) 4.625% 11/15/2028 144A (10/19/2020): 425MM Secured Notes, Price at Issuance 100, Yielding 4.63%. 3. Millicom Intl. Cellular SA (USD) 4.5% 4/27/2031 144A (10/19/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.5%. 4. Starwood Property Trust Inc. (USD) 5.5% 11/1/2023 Reg S (10/19/2020): 300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.5%. 5. Chobani LLC (USD) 4.625% 11/15/2028 Reg S (10/19/2020): 425MM Secured Notes, Price at Issuance 100, Yielding 4.63%. 6. Millicom Intl. Cellular SA (USD) 4.5% 4/27/2031 Reg S (10/19/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.5%. |
1. Vander-Bend Manufacturing Inc.: $197.5MM credit facilities: $20MM revolver; $177.5MM TLB
2. J.D. Power: $100MM incremental TL 3. E2 Open: $600MM credit facilities: $75MM revolver; $525MM TLB 4. CNT Holdings I Corp.: $1.405B credit facilities: $110MM revolver (B2/B); $980MM TLB (B2/B); $315MM TL (Caa2/CCC+) 5. Weber-Stephen Products LLC: $1.5B credit facilities: $300MM revolver; $1.2MM TLB 6. Virtusa Corp.: $725MM credit facilities: $125MM revolver; $600MM TL 7. Veregy: $342.5MM credit facilities: $42.5MM revolver; $250MM TL; $50MM DD TL 8. Adevinta: $500MM TLB (BB-/BB+) 9. E2 Open: $600MM credit facilities: $75MM revolver; $525MM TLB 10. Quirch Foods LLC: $675MM credit facilities: $475MM TLB; $200MM revolver |
Additional Commentary
NEW ISSUANCE WATCH: Chobani LLC Inc issued 425MM
| Top Widening Loans | Top Narrowing Loans |
| Compass IV LTD (EUR) TL E+800 05/09/2026 EG Group (USD) TL L+800 03/23/2026 Areas SA (EUR) TLB1 E+475 07/01/2026 Promotora de Informaciones SA (EUR) TL3 E+400 12/31/2022 Emerald Performance Materials (USD) TL L+400 08/12/2025 |
Tacala LLC (USD) TLB L+350 02/05/2027 Akorn Inc. (USD) TL L+1250 04/16/2021 Casper Bidco (EUR) TL E+850 07/30/2027 Kirk Beauty Zero GmbH (EUR) RC E+375 12/26/2021 Distributed Power Inc. (USD) TLB L+325 11/02/2025 |
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 12 bps (basis points), as of 10/20/2020
- Net negative capital flows into high-yield ETFs & mutual funds
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INVESTMENT GRADE BOND RESEARCH
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October 20, 2020
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Bond Markets
GLOBAL MARKETS MIXED TO UP AS OPTIMISM OF SOME SORT OF STIMULUS DEAL IS APPROACHING NEAR. SOME VACCINE AND THERAPUTICS HAVE BEEN TERMINATED BUT THE ONES THAT REMAIN ARE PROGRESSING. 10 Year Treasury notes were up 3.6 bps. S&P +0.47%, Dow +0.40%, NASDAQ +0.33%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 41 MILLION+ CASES AND 1.13 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 8.5 MILLION+ CASES AND 226000+ 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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Bank of America Corp. VAR% 10/24/2026 Bank of America Corp. VAR% 10/24/2051 General Electric Co. 4.35% 5/1/2050 Bank of America Corp. VAR% 10/24/2031 Cimarex Energy Co. 4.375% 3/15/2029 United Airlines Inc. 3.45% 6/1/2029 Bank of America Corp. VAR% 10/24/2024 Integris Baptist Medical Center Inc. 3.875% 8/15/2050 Philip Morris Intl Inc. 4.125% 5/17/2021 Boeing Co. 5.805% 5/1/2050 |
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| New Issues | New Issues [Continued] |
|---|---|
| 1. Ross Stores Inc. (USD) 1.875% 4/15/2031 (10/19/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.631, Yielding 1.91%.
2. Ross Stores Inc. (USD) 0.875% 4/15/2026 (10/19/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.436, Yielding .98%. 3. Penske Truck Leasing (USD) 1.2% 11/15/2025 144A (10/19/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.839, Yielding 1.23%. 4. American Honda Finance Corp. (USD) 0.4% 10/21/2022 (10/19/2020): 550MM Senior Unsecured Notes, Price at Issuance 99.97, Yielding .42%. 5. American Honda Finance Corp. (USD) FLT% 1/21/2022 (10/19/2020): 450MM Senior Unsecured Notes, Price at Issuance 100. 6. WMG Acquisition Corp. (USD) 3% 2/15/2031 (10/19/2020): 250MM Secured Notes, Price at Issuance 97.501, Yielding 3.29%. 7. T-Mobile USA Inc. (USD) 3.6% 11/15/2060 144A (10/19/2020): 1000MM Secured Notes, Price at Issuance 99.745, Yielding 3.61%. 8. Canadian Imperial Bank of Commerce (USD) 0.95% 10/23/2025 (10/19/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.961, Yielding .96%. 9. T-Mobile USA Inc. (USD) 2.25% 11/15/2031 144A (10/19/2020): 1000MM Secured Notes, Price at Issuance 99.99, Yielding 2.25%. 10. Herbie RE LTD. (USD) FLT% 1/28/2025 (10/19/2020): 100MM Unsecured Notes, Price at Issuance 100. |
Additional Commentary
NEW ISSUANCE WATCH: Ross Stores Incissued 500MM in notes.
| Top Widening Loans | Top Narrowing Loans |
| Compass IV LTD (EUR) TL E+800 05/09/2026 EG Group (USD) TL L+800 03/23/2026 Areas SA (EUR) TLB1 E+475 07/01/2026 Promotora de Informaciones SA (EUR) TL3 E+400 12/31/2022 Emerald Performance Materials (USD) TL L+400 08/12/2025 |
Tacala LLC (USD) TLB L+350 02/05/2027 Akorn Inc. (USD) TL L+1250 04/16/2021 Casper Bidco (EUR) TL E+850 07/30/2027 Kirk Beauty Zero GmbH (EUR) RC E+375 12/26/2021 Distributed Power Inc. (USD) TLB L+325 11/02/2025 |
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 12 bps (basis points), as of 10/20/2020
- Net positive capital flows into high-yield ETFs & mutual funds
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