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North American Bond Research – October 26, 2020

Posted on October 26, 2020
HIGH YIELD BOND RESEARCH
October 26, 2020
Bond Markets

GLOBAL MARKETS LOWER AS THE COVID-19 VIRUS SURGES IN BOTH THE US AND EUROPE. CHANCES OF A STIMULUS PACKAGE PASSING BEFORE THE ELECTION IS QUICKLY FADING.  10 Year Treasury notes were down 4 bps. S&P -1.86%, Dow -2.29%, NASDAQ -1.64%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 43.7 MILLION+ CASES AND 1.16 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 8.9 MILLION+ CASES AND 231000+ 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
+   Cenovus Energy Inc. 5.375% 7/15/2025 +5.6%
  General Motors Financial Co. Inc. 5.75% PERP +0.2%
  Cenovus Energy Inc. 3% 8/15/2022 +1.6%
  Micron Technology Inc. 4.663% 2/15/2030 +0.2%
  Cenovus Energy Inc. 6.75% 11/15/2039 (1) +12.7%
–   Vale Overseas LTD 3.75% 7/8/2030 -0.8%
  Bioceanico Sovereign Certificate LTD 0% 6/5/2034 Reg S -0.7%
  Occidental Petroleum Corp. 2.9% 8/15/2024 -1.2%
  Occidental Petroleum Corp. 5.875% 9/1/2025 -1.1%
  Gulfport Energy Corp. 6.625% 5/1/2023 -2.0%
Vale Overseas LTD   3.75% 7/8/2030
Bioceanico Sovereign Certificate LTD   0% 6/5/2034 Reg S
Cenovus Energy Inc.   5.375% 7/15/2025
Occidental Petroleum Corp.   2.9% 8/15/2024
Occidental Petroleum Corp.   5.875% 9/1/2025
Gulfport Energy Corp.   6.625% 5/1/2023
General Motors Financial Co. Inc.   5.75% PERP
Cenovus Energy Inc.   3% 8/15/2022
Micron Technology Inc.   4.663% 2/15/2030
Olin Corp.   5% 2/1/2030
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.01% 0.15% 0.69% 1.36% 5.82% 7.44%
Mining 0.14% 0.40% 76.29% 24.36% -8.52% -4.72%
Construction -0.06% -0.01% 1.64% 4.49% 6.46% 7.71%
Manufacturing -0.01% 0.10% 1.47% 2.68% 3.58% 6.72%
Transportion, Communication, Electric/Gas -0.02% -0.07% 2.81% 3.66% 4.13% 5.69%
Wholesale -0.06% 0.10% 0.85% 1.24% 2.28% 4.57%
Retail -0.03% 0.24% 1.82% 5.18% 3.39% 5.39%
Finance, Insurance, Real-Estate 0.00% 0.07% 1.24% 3.46% 2.80% 4.87%
Services -0.04% -0.21% 0.75% 2.80% 2.95% 4.75%
Public Administration 0.02% 0.50% 1.14% 4.86% 8.22% 10.00%
Energy 0.14% 0.50% 65.98% 20.99% -7.75% -3.70%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 10/26/2020)
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:   No New Issues.
Top Widening Loans Top Narrowing Loans
SSH Group Hldg Inc. (USD) TL2 L+825 07/30/2026
Mattress Firm (USD) TL EXIT 11/21/2022
Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
EG Group (EUR) TL E+775 03/23/2026
Rayonier AM Products Inc. (USD) TLA L+375 11/17/2022
Tacala LLC (USD) TLB L+350 02/05/2027
JC Penney Co. Inc. (USD) DD L+1175 11/15/2020
Wittur (EUR) TL E+850 09/19/2027
Concordia International (EUR) TL E+525 09/06/2024

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 13 bps (basis points), as of 10/26/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
October 26, 2020
Bond Markets

GLOBAL MARKETS LOWER AS THE COVID-19 VIRUS SURGES IN BOTH THE US AND EUROPE. CHANCES OF A STIMULUS PACKAGE PASSING BEFORE THE ELECTION IS QUICKLY FADING.  10 Year Treasury notes were down 4 bps. S&P -1.86%, Dow -2.29%, NASDAQ -1.64%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 43.7 MILLION+ CASES AND 1.16 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 8.9 MILLION+ CASES AND 231000+ 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% 10/24/2051 +0.8%
  Priceline Group Inc. 3.6% 6/1/2026 +0.3%
  General Motors Co. 6.8% 10/1/2027 +0.2%
  Gilead Sciences Inc. 4.8% 4/1/2044 +1.0%
  General Electric Co. 4.35% 5/1/2050 +0.6%
–   Boeing Co. 5.805% 5/1/2050 -0.2%
  General Electric Co. FLT% PERP (1) -2.4%
  GE Capital Intl. Funding Co. 4.418% 11/15/2035 -0.2%
  Vale Overseas LTD 3.75% 7/8/2030 -0.8%
  Commonspirit Health 2.782% 10/1/2030 -0.0%
Boeing Co.   5.805% 5/1/2050
Bank of America Corp.   VAR% 10/24/2051
Priceline Group Inc.   3.6% 6/1/2026
General Motors Co.   6.8% 10/1/2027
Gilead Sciences Inc.   4.8% 4/1/2044
General Electric Co.   FLT% PERP (1)
General Electric Co.   4.35% 5/1/2050
Lowe’s Companies Inc.   3% 10/15/2050
GE Capital Intl. Funding Co.   4.418% 11/15/2035
Bank of America Corp.   VAR% 10/24/2031
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.01% -0.48% -0.64% -0.76% 5.18% 6.33%
Construction -0.05% 0.01% 0.51% 1.70% 6.42% 7.27%
Manufacturing -0.00% -0.46% -0.41% -0.50% 7.25% 8.20%
Transportion, Communication, Electric/Gas -0.04% -0.74% -0.96% -1.66% 7.77% 8.72%
Wholesale 0.00% -0.29% 0.10% 1.05% 7.44% 9.23%
Retail 0.01% -0.51% -0.41% -1.33% 8.36% 9.70%
Finance, Insurance, Real-Estate 0.01% -0.23% -0.11% 0.15% 6.32% 7.36%
Services 0.01% -0.45% -0.45% -0.43% 6.57% 7.21%
Public Administration 0.03% -0.08% -0.11% 0.19% 5.02% 5.14%
Energy -0.03% -0.55% -0.89% -1.24% 3.86% 5.39%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]

(None Current 10/26/2020)
Additional Commentary

NEW ISSUANCE WATCH:  No New Issues.
Top Widening Loans Top Narrowing Loans
SSH Group Hldg Inc. (USD) TL2 L+825 07/30/2026
Mattress Firm (USD) TL EXIT 11/21/2022
Buzz Merger Sub LTD (USD) TLB L+275 01/29/2027
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
EG Group (EUR) TL E+775 03/23/2026
Rayonier AM Products Inc. (USD) TLA L+375 11/17/2022
Tacala LLC (USD) TLB L+350 02/05/2027
JC Penney Co. Inc. (USD) DD L+1175 11/15/2020
Wittur (EUR) TL E+850 09/19/2027
Concordia International (EUR) TL E+525 09/06/2024

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 13 bps (basis points), as of 10/26/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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