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North American Bond Research – October 29, 2020

Posted on October 29, 2020
HIGH YIELD BOND RESEARCH
October 29, 2020
Bond Markets

US MARKETS BOUNCED BACK AMID STRONG REBOUND IN US GDP NUMBERS WHILE EUROPE’S MARKETS WERE UNCHANGED AMID COVID SURGE. 10 Year Treasury notes were up 5.4 bps. S&P +1.19%, Dow +0.52%, NASDAQ +1.64%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 45.2 MILLION+ CASES AND 1.18 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 9.1 MILLION+ CASES AND 233000+ 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
+   Ford Motor Co. 8.5% 4/21/2023 +0.1%
  Ford Motor Co. 9.625% 4/22/2030 +1.0%
  United Rentals North AM 3.875% 2/15/2031 +0.3%
  Vale Overseas LTD 3.75% 7/8/2030 +0.2%
  Range Resources Corp. 4.875% 5/15/2025 +0.2%
–   Continental Resources Inc. 4.375% 1/15/2028 -2.1%
  Cheniere Corpus Christi Hldgs LLC 5.125% 6/30/2027 -0.2%
  Occidental Petroleum Corp. 6.625% 9/1/2030 -1.5%
  Pacific Gas & Electric Co. 4.95% 7/1/2050 -1.5%
  Broadcom LTD 4.25% 4/15/2026 -0.3%
Continental Resources Inc.   4.375% 1/15/2028
Cheniere Corpus Christi Hldgs LLC   5.125% 6/30/2027
Occidental Petroleum Corp.   6.625% 9/1/2030
Pacific Gas & Electric Co.   4.95% 7/1/2050
Ford Motor Co.   8.5% 4/21/2023
Ford Motor Co.   9.625% 4/22/2030
Broadcom LTD   4.25% 4/15/2026
United Rentals North AM   3.875% 2/15/2031
Kraft Heinz Co.   4.625% 1/30/2029
PBF Hldg Co. LLC   7.25% 6/15/2025
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.16% -0.17% 0.86% 1.08% 5.57% 7.44%
Mining -0.58% -0.14% 73.01% 24.53% -10.82% -7.15%
Construction -0.26% -0.39% 1.42% 3.35% 5.99% 7.06%
Manufacturing -0.30% -0.32% 1.50% 2.05% 3.29% 6.34%
Transportion, Communication, Electric/Gas -0.30% -0.32% 2.99% 3.22% 3.90% 6.10%
Wholesale -0.33% -0.39% 0.71% 0.56% 2.29% 4.32%
Retail -0.38% -0.49% 1.53% 4.09% 2.57% 4.44%
Finance, Insurance, Real-Estate -0.25% -0.29% 1.27% 2.61% 2.40% 4.43%
Services -0.35% -0.67% 0.77% 2.34% 3.29% 5.02%
Public Administration -0.16% 0.13% 1.24% 4.47% 8.01% 10.04%
Energy -0.59% -0.32% 64.88% 21.58% -9.30% -5.12%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. United Wholesale Mortgage LLC (USD) 5.5% 11/15/2025 144A (10/28/2020): 800MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.5%.

2. P&L Development LLC (USD) 7.75% 11/15/2025 144A (10/28/2020): 415MM First Lien Notes, Price at Issuance 100, Yielding 7.75%.

3. P&L Development LLC (USD) 7.75% 11/15/2025 Reg S (10/28/2020): 415MM First Lien Notes, Price at Issuance 100, Yielding 7.75%.

4. Academy LTD (USD) 6% 11/15/2027 Reg S (10/28/2020): 400MM Secured Notes, Price at Issuance 100, Yielding 6%.

5. United Wholesale Mortgage LLC (USD) 5.5% 11/15/2025 Reg S (10/28/2020): 800MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.5%.

6. Academy LTD (USD) 6% 11/15/2027 144A (10/28/2020): 400MM Secured Notes, Price at Issuance 100, Yielding 6%.

1. Les Schwab Tire Centers: $1.575MM TLB (B2/B)

2. J.D. Power: $100MM incremental TL

3. Highline Aftermarket Acquisition LLC: $735MM TL (B2/B)

4. E2 Open: $600MM credit facilities: $75MM revolver; $525MM TLB

5. CNT Holdings I Corp.: $1.405B credit facilities: $110MM revolver (B2/B); $980MM TLB (B2/B); $315MM TL (Caa2/CCC+)

6. Amentum: $980MM TL (B1/B)

7. Trugreen LP: $1.425MM TLs: $1.15B TL (B1/B); $275MM (Caa1/CCC+)

8. J.D. Power: $100MM incremental TL

9. Academy Ltd.: $400MM TL (B2/B)

10. Amentum: $980MM TL (B1/B)

Additional Commentary

NEW ISSUANCE WATCH:    United Wholesale Mortgage LLC Inc issued 225 MM Notes.
Top Widening Loans Top Narrowing Loans
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
SunGard Availability Services Capital Inc. (USD) TLB L+1000 10/01/2022
Unifrax Corp. (USD) TL2 L+850 12/14/2026
BioClinica Inc. (USD) TL L+825 10/06/2024
Boardriders Inc. (USD) TLA L+800 10/23/2023
Rover (USD) TLB2 L+350 11/01/2024
Systems Maintenance Services Holdings Inc. (USD) TL L+500 10/11/2023
Ameriforge Group Inc. (USD) L+800 06/01/2022
Casper Bidco (EUR) TL E+850 07/30/2027
Quorum Health Corp. (USD) TL EXIT L+825 04/29/2025

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 13 bps (basis points), as of 10/29/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
October 29, 2020
Bond Markets

US MARKETS BOUNCED BACK AMID STRONG REBOUND IN US GDP NUMBERS WHILE EUROPE’S MARKETS WERE UNCHANGED AMID COVID SURGE. 10 Year Treasury notes were up 5.4 bps. S&P +1.19%, Dow +0.52%, NASDAQ +1.64%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 45.2 MILLION+ CASES AND 1.18 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 9.1 MILLION+ CASES AND 233000+ 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
+   Anheuser-Busch Inbev Worldwide Inc. 5.55% 1/23/2049 +0.1%
  Enterprise Products Operating LLC 4.8% 2/1/2049 +0.8%
  Biogen Inc. 2.25% 5/1/2030 +0.2%
  Anheuser-Busch Inbev Worldwide Inc. 4.5% 6/1/2050 +0.4%
  Valero Energy Corp. 4% 4/1/2029 +0.5%
–   Boeing Co. 4.875% 5/1/2025 -1.1%
  Boeing Co. 5.805% 5/1/2050 -0.5%
  Boeing Co. 5.93% 5/1/2060 -2.0%
  Lowe’s Companies Inc. 1.7% 10/15/2030 -0.3%
  JPMorgan Chase & Co. 2.522% 4/22/2031 -0.6%
Boeing Co.   4.875% 5/1/2025
Boeing Co.   5.805% 5/1/2050
Boeing Co.   5.93% 5/1/2060
Lowe’s Companies Inc.   1.7% 10/15/2030
Anheuser-Busch Inbev Worldwide Inc.   5.55% 1/23/2049
JPMorgan Chase & Co.   2.522% 4/22/2031
Gilead Sciences Inc.   2.8% 10/1/2050
SYSCO Corp.   2.4% 2/15/2030
Bank of America Corp.   VAR% 10/24/2031
GE Capital Intl. Funding Co.   4.418% 11/15/2035
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.04% 0.13% 0.28% -0.53% 5.62% 7.04%
Construction -0.01% 0.33% 0.57% 1.00% 6.07% 7.52%
Manufacturing -0.00% 0.20% 0.28% -0.28% 7.62% 8.85%
Transportion, Communication, Electric/Gas 0.08% 0.40% 0.10% -1.11% 8.60% 10.06%
Wholesale -0.06% 0.18% 0.63% 0.94% 7.77% 9.78%
Retail 0.02% 0.27% 0.39% -0.89% 9.15% 10.81%
Finance, Insurance, Real-Estate 0.02% 0.24% 0.49% 0.42% 6.64% 7.93%
Services 0.02% 0.20% 0.20% 0.04% 6.77% 7.77%
Public Administration -0.00% 0.03% 0.20% 0.07% 5.02% 5.29%
Energy -0.02% 0.14% 0.21% -0.91% 4.39% 6.28%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Sterling Bancorp (USD) VAR% 11/1/2030 (10/28/2020): 225MM Subordinated Notes, Price at Issuance 100.

2. Greater Toronto Airport Authority (CAD) 1.54% 5/3/2028 (10/28/2020): 500MM Secured Notes, Price at Issuance 99.937, Yielding 1.55%.

Additional Commentary

NEW ISSUANCE WATCH:  Sterling Bancorp issued 225 MM in notes.
Top Widening Loans Top Narrowing Loans
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
SunGard Availability Services Capital Inc. (USD) TLB L+1000 10/01/2022
Unifrax Corp. (USD) TL2 L+850 12/14/2026
BioClinica Inc. (USD) TL L+825 10/06/2024
Boardriders Inc. (USD) TLA L+800 10/23/2023
Rover (USD) TLB2 L+350 11/01/2024
Systems Maintenance Services Holdings Inc. (USD) TL L+500 10/11/2023
Ameriforge Group Inc. (USD) L+800 06/01/2022
Casper Bidco (EUR) TL E+850 07/30/2027
Quorum Health Corp. (USD) TL EXIT L+825 04/29/2025

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 13 bps (basis points), as of 10/29/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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