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North American Bond Research – October 9, 2020

Posted on October 9, 2020
HIGH YIELD BOND RESEARCH
October 9, 2020
Bond Markets
GLOBAL MARKETS UP AS TRUMP AND THE DEMOCRATS GET MUCH CLOSER TO A DEAL. PRESIDENT TRUMP PROPOSED A $1.8 TRILLION DOLLAR PACKAGE TODAY. 10 Year Treasury notes were up .1 bps. S&P +0.88%, Dow +0.57%, NASDAQ +1.39%.

CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 37 MILLION+ CASES AND 1.07 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 7.9 MILLION+ CASES AND 218000+ 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. 4.95% 7/1/2050 +0.4%
  Broadcom LTD 4.75% 4/15/2029 +0.3%
  Pacific Gas & Electric Co. 4.55% 7/1/2030 +0.4%
  General Motors Co. 4.875% 10/2/2023 +0.1%
  Broadcom LTD 4.7% 4/15/2025 +0.0%
–   Freeport McMoRan Copper & Gold Inc. 5.45% 3/15/2043 -1.1%
  Cinemark Inc. 4.875% 6/1/2023 -1.1%
  Sprint Nextel Corp. 7.875% 9/15/2023 -0.1%
  Petrobras Global Finance BV 7.375% 1/17/2027 -0.1%
  Centene Corp. 3% 10/15/2030 -0.5%
Pacific Gas & Electric Co.   4.95% 7/1/2050
Broadcom LTD   4.75% 4/15/2029
Freeport McMoRan Copper & Gold Inc.   5.45% 3/15/2043
Pacific Gas & Electric Co.   4.55% 7/1/2030
General Motors Co.   4.875% 10/2/2023
Cinemark Inc.   4.875% 6/1/2023
Broadcom LTD   4.7% 4/15/2025
Cinemark Inc.   5.125% 12/15/2022
Chubb INA Hldgs Inc.   1.375% 9/15/2030
Steel Dynamics   1.65% 10/15/2027
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.06% 0.76% -0.10% 3.98% 5.47% 7.67%
Mining 0.29% 0.83% 0.65% 13.25% -11.48% -7.85%
Construction 0.14% 0.84% 1.59% 6.44% 6.10% 8.14%
Manufacturing 0.20% 0.85% 0.84% 4.62% 3.12% 7.35%
Transportion, Communication, Electric/Gas 0.14% 0.59% -0.64% 2.96% 3.90% 6.16%
Wholesale 0.19% 0.59% 0.16% 2.81% 2.14% 5.04%
Retail 0.22% 0.87% 1.25% 6.97% 2.80% 5.85%
Finance, Insurance, Real-Estate 0.11% 0.61% 0.53% 4.54% 2.02% 4.92%
Services 0.15% 0.62% 0.26% 5.24% 3.47% 6.43%
Public Administration 0.66% 1.19% 0.73% 6.07% 7.94% 11.02%
Energy 0.27% 0.88% -0.18% 11.37% -10.65% -7.15%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Gray Television (USD) 4.75% 10/15/2030 Reg S (10/08/2020): 800MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.75%.

2. Peninsula Pacific Entertainment (USD) 8.5% 11/15/2027 144A (10/08/2020): 475MM Senior Unsecured Notes, Price at Issuance 100, Yielding 8.5%.

3. Cheplapharm Arzneimittel GmbH (USD) 5.5% 1/15/2028 144A (10/08/2020): 500MM Secured Notes, Price at Issuance 100, Yielding 5.5%.

4. Cheplapharm Arzneimittel GmbH (USD) 5.5% 1/15/2028 Reg S (10/08/2020): 500MM Secured Notes, Price at Issuance 100, Yielding 5.5%.

5. Clear Street Capital LLC (USD) 6% 10/15/2025 (10/08/2020): 50MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6%.

6. Brightstar Corp. (USD) 9.75% 10/15/2025 144A (10/08/2020): 420MM Secured Notes, Price at Issuance 100, Yielding 9.75%.

7. Alliant Holdings Intermediate LLC (USD) 4.25% 10/15/2027 144A (10/08/2020): 525MM Secured Notes, Price at Issuance 100, Yielding 4.25%.

8. MGM Resorts International (USD) 4.75% 10/15/2028 (10/08/2020): 750MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.75%.

9. Clear Street Capital LLC (USD) 6% 10/15/2025 (10/08/2020): 50MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6%.

10. Gray Television (USD) 4.75% 10/15/2030 144A (10/08/2020): 800MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.75%.

 1. American Residential Services: $470MM TLB (B1/B)

2. Array Technologies: $575MM TLB (B1/B+)

3. Fly Leasing LTD: $180MM TLB (Ba3/BBB-)

4. Maravai Lifesciences: $750MM credit facilities: $150MM revolver; $600MM TLB

5. Vander-Bend Manufacturing Inc.: $197.5MM credit facilities: $20MM revolver; $177.5MM TLB

6. Pae Holding Corp.: $890MM TLB (B2/B)

7. Quirch Foods LLC: $675MM credit facilities: $475MM TLB; $200MM revolver

8. Wheelabrator Technologies Inc.: $1.3965B TLB

9. Mega Broadband Investments Holdings LLC: $725MM credit facilities: $75MM revolver; $650MM TLB

10. Wheelabrator Technologies Inc.: $1.3965B TLB
Additional Commentary
NEW ISSUANCE WATCH:  Gray Television issued 800MM of Notes.
Top Widening Loans Top Narrowing Loans
CSM Bakery (USD) TL L+775 05/23/2021
Akorn Inc. (USD) TL L+1250 04/16/2021
API Technologies Corp. (USD) TL L+425 05/09/2026
Owens & Minor Inc. (USD) TLA2 L+350 07/27/2022
Solenis Intl LP (USD) TL2 L+850 06/18/2024		 Tacala LLC (USD) TLB L+350 02/05/2027
Fortress Merger Sub Inc. (USD) TL L+400 10/21/2023
CPM Holdings Inc. (USD) TL2 L+825 11/16/2026
Philadelphia Energy Solutions (USD) TLA L+625 12/31/2022
Penn Virginia Holding Corp. (USD) RC L+325 05/07/2024

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 10/09/2020
  • Net negative capital flows into high-yield ETFs & mutual funds
INVESTMENT GRADE BOND RESEARCH
October 9, 2020
Bond Markets
GLOBAL MARKETS UP AS TRUMP AND THE DEMOCRATS GET MUCH CLOSER TO A DEAL. PRESIDENT TRUMP PROPOSED A $1.8 TRILLION DOLLAR PACKAGE TODAY. 10 Year Treasury notes were up .1 bps. S&P +0.88%, Dow +0.57%, NASDAQ +1.39%.

CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 37 MILLION+ CASES AND 1.07 MILLION DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 7.9 MILLION+ CASES AND 218000+ 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
+   Lowe’s Companies Inc. 1.7% 10/15/2030 +0.2%
  Lowe’s Companies Inc. 3% 10/15/2050 +0.4%
  Enterprise Products Operating LLC 3.2% 2/15/2052 +1.6%
  Conagra Brands Inc. 5.4% 11/1/2048 +0.7%
  HCA Inc. 5.25% 6/15/2049 +0.5%
–   Humana Inc. 3.85% 10/1/2024 -0.1%
  Amazon.com Inc. 2.5% 6/3/2050 -0.4%
  Conagra Brands Inc. 4.3% 5/1/2024 -0.0%
  Australia & New Zealand Banking Group 3.7% 11/16/2025 -8.8%
  Southwest Airlines Co. 5.25% 5/4/2025 -1.3%
Lowe’s Companies Inc.   1.7% 10/15/2030
Humana Inc.   3.85% 10/1/2024
Lowe’s Companies Inc.   3% 10/15/2050
Enterprise Products Operating LLC   3.2% 2/15/2052
Conagra Brands Inc.   5.4% 11/1/2048
HCA Inc.   5.25% 6/15/2049
Amazon.com Inc.   2.5% 6/3/2050
CVS Health Corp.   5.05% 3/25/2048
Cooperatieve Rabobank U.A.   1.004% 9/24/2026 Reg S
Conagra Brands Inc.   1.375% 11/1/2027
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.13% -0.08% -0.84% 1.79% 4.94% 5.48%
Construction 0.05% -0.07% 1.00% 3.03% 5.04% 5.28%
Manufacturing 0.08% -0.07% -0.01% 1.07% 6.99% 7.31%
Transportion, Communication, Electric/Gas 0.13% -0.19% -0.56% 0.76% 7.79% 8.04%
Wholesale 0.03% 0.04% 0.13% 1.92% 6.59% 8.04%
Retail 0.11% 0.02% 0.10% 0.35% 8.03% 8.84%
Finance, Insurance, Real-Estate 0.07% 0.01% -0.03% 1.05% 6.06% 6.66%
Services 0.06% -0.01% -0.02% 1.07% 6.66% 6.73%
Public Administration 0.01% -0.11% 0.19% 0.24% 5.06% 4.26%
Energy 0.12% -0.16% -1.21% 1.03% 3.64% 4.67%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. THE Rockefeller Foundation (USD) 2.492% 10/1/2050 (10/08/2020): 700MM Unsecured Notes, Price at Issuance 100, Yielding 2.49%.

2. Ursa Re LTD (USD) FLT% 12/7/2023 (10/08/2020): 425MM Unsecured Notes, Price at Issuance 100.

3. Ursa Re LTD (USD) FLT% 12/7/2023 (10/08/2020): 350MM Unsecured Notes, Price at Issuance 100.

4. Federal Realty Investment Trust (USD) 1.25% 2/15/2026 (10/08/2020): 400MM Senior Unsecured Notes, Price at Issuance 99.339, Yielding 1.38%.

5. Clear Street Capital LLC (USD) 6% 10/15/2025 (10/08/2020): 50MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6%.

6. THE Independent Order Of Foresters (CAD) VAR% 10/15/2035 (10/08/2020): 250MM Subordinated Notes, Price at Issuance 100.

7. Antofagasta PLC (USD) 2.375% 10/14/2030 (10/08/2020): 500MM Senior Unsecured Notes, Price at Issuance 99.647, Yielding 2.41%.

8. Clear Street Capital LLC (USD) 6% 10/15/2025 (10/08/2020): 50MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6%.

9. ORIGIN BANK (USD) VAR% 11/1/2030 (10/08/2020): 80MM Subordinated Notes, Price at Issuance 100.
Additional Commentary
NEW ISSUANCE WATCH:  THE Rockefeller Foundation issued 700MM in notes.
Top Widening Loans Top Narrowing Loans
CSM Bakery (USD) TL L+775 05/23/2021
Akorn Inc. (USD) TL L+1250 04/16/2021
API Technologies Corp. (USD) TL L+425 05/09/2026
Owens & Minor Inc. (USD) TLA2 L+350 07/27/2022
Solenis Intl LP (USD) TL2 L+850 06/18/2024		 Tacala LLC (USD) TLB L+350 02/05/2027
Fortress Merger Sub Inc. (USD) TL L+400 10/21/2023
CPM Holdings Inc. (USD) TL2 L+825 11/16/2026
Philadelphia Energy Solutions (USD) TLA L+625 12/31/2022
Penn Virginia Holding Corp. (USD) RC L+325 05/07/2024

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 10/09/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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