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North American Bond Research – October 23, 2020

Posted on October 23, 2020
HIGH YIELD BOND RESEARCH
October 23, 2020
Bond Markets

GLOBAL MARKETS HIGHER AS DEMOCRATS, THE WHITE HOUSE AND THE SENATE REPUBLICANS, WRESTLE AND COME CLOSER TO PRODUCING A STIMULUS PLAN. CORONA VIRUS IS SURGING GLOBALLY. 10 Year Treasury notes were down .7 bps. S&P +0.34%, Dow -0.10%, NASDAQ +0.37%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 42.4 MILLION+ CASES AND 1.15 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 8.7 MILLION+ CASES AND 229000+ 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
+   Pacific Gas & Electric Co. 4.3% 3/15/2045 +0.5%
  Micron Technology Inc. 4.185% 2/15/2027 +0.1%
  Enbridge Inc. VAR% 3/1/2089 +0.1%
  Pacific Gas & Electric Co. 4.55% 7/1/2030 +0.3%
  Cleveland Cliffs Inc. 5.875% 6/1/2027 +3.1%
–   Gulfport Energy Corp. 6.625% 5/1/2023 -1.4%
  Vale Overseas LTD 3.75% 7/8/2030 -0.1%
  EQT Corp. 3% 10/1/2022 -0.3%
  Occidental Petroleum Corp. 2.9% 8/15/2024 -0.1%
  Ford Motor Co. 8.5% 4/21/2023 -0.3%
Gulfport Energy Corp.   6.625% 5/1/2023
Pacific Gas & Electric Co.   4.3% 3/15/2045
Vale Overseas LTD   3.75% 7/8/2030
EQT Corp.   3% 10/1/2022
Micron Technology Inc.   4.185% 2/15/2027
Enbridge Inc.   VAR% 3/1/2089
Occidental Petroleum Corp.   2.9% 8/15/2024
Pacific Gas & Electric Co.   4.55% 7/1/2030
Cleveland Cliffs Inc.   5.875% 6/1/2027
Diamondback Energy Inc.   3.5% 12/1/2029
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.03% 0.09% 0.54% 1.76% 5.70% 7.43%
Mining 0.12% -0.02% 73.05% 21.98% -9.69% -5.93%
Construction -0.01% 0.09% 1.78% 4.62% 6.44% 7.74%
Manufacturing -0.03% 0.13% 1.29% 2.85% 3.37% 6.56%
Transportion, Communication, Electric/Gas -0.04% -0.05% 2.63% 3.28% 3.99% 5.70%
Wholesale 0.08% 0.12% 0.72% 1.25% 1.74% 4.09%
Retail -0.03% 0.27% 1.61% 5.42% 3.22% 5.26%
Finance, Insurance, Real-Estate -0.02% 0.17% 1.15% 3.69% 2.49% 4.63%
Services -0.12% -0.04% 0.53% 3.06% 3.11% 5.00%
Public Administration 0.20% -0.33% 0.64% 4.96% 8.10% 10.03%
Energy 0.09% 0.29% 64.15% 19.47% -8.20% -4.16%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Unisys Corp. (USD) 6.875% 11/1/2027 144A (10/22/2020): 485MM Secured Notes, Price at Issuance 100, Yielding 6.88%.

2. LD Hldg Group LLC (USD) 6.5% 11/1/2025 144A (10/22/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.5%.

3. Unisys Corp. (USD) 6.875% 11/1/2027 Reg S (10/22/2020): 485MM Secured Notes, Price at Issuance 100, Yielding 6.88%.

4. LD Hldg Group LLC (USD) 6.5% 11/1/2025 Reg S (10/22/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.5%.

1. LABL Inter: $500MM senior PIK toggle (/B-)

2. Highland Holdings: $500MM senior secured PIK (/BB+)

3. Advantage Sales: $500MM senior secured notes (B2/B)

4. Sizzling Platter: $325MM senior secured notes (B3/)

5. Prime Healthcare: $610MM senior secured notes (B2/B-)

6. Akumin: $375MM senior secured notes (B3/B-)

7. NRG Energy Inc.: $2361MM secured and unsecured notes

8. Empire Resorts Inc.: $475MM senior secured notes (B+/B+)

9. Weber-Stephen Products LLC: $1.5B credit facilities: $300MM revolver; $1.2MM TLB

10. J.D. Power: $100MM incremental TL

Additional Commentary

NEW ISSUANCE WATCH:   Unisys Corp. issued 485 MM
Top Widening Loans Top Narrowing Loans
Systems Maintenance Services Holdings Inc. (USD) TL L+500 10/11/2023
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
Alliance Healthcare Services Inc. (USD) TL L+450 10/24/2023
Arbor Pharmaceuticals LLC (USD) TLB L+500 07/05/2023
Neovia Logistics International Holdings (USD) TL L+650 05/08/2024
Rayonier AM Products Inc. (USD) TLA L+375 11/17/2022
Juice Plus+ (USD) TL L+550 11/20/2025
Stubhub (USD) TLB L+350 02/13/2027
Distributed Power Inc. (USD) TLB L+325 11/02/2025
Casper Bidco (EUR) TL E+850 07/30/2027

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 13 bps (basis points), as of 10/23/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
October 23, 2020
Bond Markets

GLOBAL MARKETS REBOUNDED ON NEWS SPEAKER PELOSI WAS WILLING TO INK A DEAL. JOBLESS CLAIMS FELL THIS WEEK TO 787K ALMOST MATCHING MARCH’S LOW’S OF 767K JOBS LOST.  10 Year Treasury notes were up 3.2 bps. S&P +0.52%, Dow +0.54%, NASDAQ +0.19%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 42.4 MILLION+ CASES AND 1.15 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 8.7 MILLION+ CASES AND 229000+ 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
+   Bank of America Corp. VAR% 10/24/2031 +0.2%
  Bank of America Corp. VAR% 10/24/2051 +1.3%
  CVS Health Corp. 4.3% 3/25/2028 +0.3%
  Anheuser-Busch Co. Inc. 4.7% 2/1/2036 +0.3%
  General Electric Co. 4.35% 5/1/2050 +2.2%
–   Citigroup Inc. VAR% 11/4/2022 -0.0%
  Multicare Health System 2.803% 8/15/2050 -2.3%
  Citigroup Inc. 2.7% 10/27/2022 -0.0%
  Citibank NA 3.165% 2/19/2022 -0.0%
  AT&T Inc. 3.65% 6/1/2051 -1.0%
Bank of America Corp.   VAR% 10/24/2031
Bank of America Corp.   VAR% 10/24/2051
CVS Health Corp.   4.3% 3/25/2028
Anheuser-Busch Co. Inc.   4.7% 2/1/2036
General Electric Co.   4.35% 5/1/2050
Wells Fargo & Co.   5.013% 4/4/2051
Midamerican Energy Co.   6.125% 4/1/2036
Citigroup Inc.   VAR% 11/4/2022
Bank of America Corp.   VAR% 10/24/2024
Biogen Inc.   3.15% 5/1/2050
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.18% -0.39% -0.65% -0.33% 5.13% 6.36%
Construction -0.08% 0.12% 0.11% 1.19% 5.98% 7.10%
Manufacturing -0.15% -0.41% -0.44% -0.29% 7.18% 8.22%
Transportion, Communication, Electric/Gas -0.17% -0.68% -0.96% -1.36% 7.83% 8.93%
Wholesale -0.17% -0.31% -0.11% 0.69% 7.32% 9.06%
Retail -0.21% -0.54% -0.52% -1.27% 8.08% 9.55%
Finance, Insurance, Real-Estate -0.09% -0.22% -0.14% 0.28% 6.23% 7.37%
Services -0.15% -0.48% -0.56% -0.47% 6.82% 7.60%
Public Administration -0.06% -0.12% 0.09% 0.17% 5.00% 5.13%
Energy -0.19% -0.48% -0.92% -0.87% 3.88% 5.56%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Sutter Health (USD) 2.294% 8/15/2030 (10/22/2020): 700MM Unsecured Notes, Price at Issuance 100, Yielding 2.29%.

2. Sutter Health (USD) 3.161% 8/15/2040 (10/22/2020): 400MM Unsecured Notes, Price at Issuance 100, Yielding 3.16%.

3. Sutter Health (USD) 1.321% 8/15/2025 (10/22/2020): 300MM Unsecured Notes, Price at Issuance 100, Yielding 1.32%.

4. Midmichigan Health (USD) 3.409% 6/1/2050 (10/22/2020): 318MM Secured Notes, Price at Issuance 100, Yielding 3.41%.

5. Sutter Health (USD) 3.361% 8/15/2050 (10/22/2020): 589MM Unsecured Notes, Price at Issuance 100, Yielding 3.36%.

6. Synovus Bank Of Columbus, Georgia (USD) VAR% 10/29/2030 (10/22/2020): 200MM Subordinated Notes, Price at Issuance 100.

7. Royal Bank of Canada (CAD) VAR% 2/24/2081 (10/22/2020): 1250MM Junior Subordinated Notes, Price at Issuance 100.

Additional Commentary

NEW ISSUANCE WATCH:  Sutter Health   Incissued 700MM in notes.
Top Widening Loans Top Narrowing Loans
Systems Maintenance Services Holdings Inc. (USD) TL L+500 10/11/2023
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
Alliance Healthcare Services Inc. (USD) TL L+450 10/24/2023
Arbor Pharmaceuticals LLC (USD) TLB L+500 07/05/2023
Neovia Logistics International Holdings (USD) TL L+650 05/08/2024
Rayonier AM Products Inc. (USD) TLA L+375 11/17/2022
Juice Plus+ (USD) TL L+550 11/20/2025
Stubhub (USD) TLB L+350 02/13/2027
Distributed Power Inc. (USD) TLB L+325 11/02/2025
Casper Bidco (EUR) TL E+850 07/30/2027

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 13 bps (basis points), as of 10/23/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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