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North American Bond Research – September 1, 2020

Posted on September 1, 2020
HIGH YIELD BOND RESEARCH
September 1, 2020
Bond Markets

ONCE AGAIN EUROPE’S MARKETS ARE DOWN WHILE US MARKETS ARE UP AS THE US DOLLAR CONTINUES TO WEAKEN AGAINST THE EURO. 10 Year Treasury notes were down 1.2 bps. S&P +0.67%, Dow -0.22%, NASDAQ +0.68%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 25.8 MILLION+ CASES AND 858000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 6.25 MILLION+ CASES AND 189000+ 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
+   Gogo Inc. 6% 5/15/2022 (1) +35.7%
  Tenet Healthcare Corp. 8.125% 4/1/2022 +3.0%
  Petrobras Global Finance BV 7.375% 1/17/2027 +0.8%
  T-Mobile USA Inc. 3.875% 4/15/2030 144A +0.2%
  Intl Lease Finance Corp. 8.625% 1/15/2022 +0.0%
–   United Rentals North AM 3.875% 2/15/2031 -0.1%
  Citigroup Inc. 5.95% PERP (1) -1.2%
  Pacific Gas & Electric Co. 4.6% 6/15/2043 -0.4%
  Ford Motor Co. 4.75% 1/15/2043 -0.2%
  Southwestern Energy Co. 7.75% 10/1/2027 -1.5%
Gogo Inc.   6% 5/15/2022 (1)
Tenet Healthcare Corp.   8.125% 4/1/2022
Petrobras Global Finance BV   7.375% 1/17/2027
T-Mobile USA Inc.   3.875% 4/15/2030 144A
United Rentals North AM   3.875% 2/15/2031
Intl Lease Finance Corp.   8.625% 1/15/2022
Pacific Gas & Electric Co.   4.55% 7/1/2030
Elanco Animal Health Inc.   3.912% 8/27/2021
Citigroup Inc.   5.95% PERP (1)
T-Mobile USA Inc.   3.75% 4/15/2027 144A
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.20% 0.50% 0.96% 5.52% 5.76% 9.35%
Mining 0.08% 0.36% 1.62% 12.75% -8.50% -4.18%
Construction 0.11% 0.49% 1.04% 7.52% 5.01% 7.84%
Manufacturing 0.06% 0.50% 0.70% 7.18% 2.12% 6.13%
Transportion, Communication, Electric/Gas 0.04% 0.28% 0.33% 4.40% 4.05% 6.40%
Wholesale -0.03% -1.19% -0.95% 3.45% 0.04% 2.81%
Retail 0.00% 0.50% 1.39% 8.06% 1.43% 4.53%
Finance, Insurance, Real-Estate 0.06% 0.34% 1.40% 8.18% 1.68% 4.61%
Services 0.07% 0.57% 1.54% 6.19% 2.29% 5.79%
Public Administration -0.17% 0.12% 2.11% 8.68% 6.05% 8.67%
Energy 0.07% 0.37% 1.57% 11.37% -7.04% -3.10%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Tenet Healthcare Corp. (USD) 6.125% 10/1/2028 144A (09/01/2020): 2500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.13%. 1. Avianca : $1.3B DIP DD TLB

2. MAG Aerospace: $290.7MM TL (B3/B)

3. CJ Foods Inc.: $285MM TLB

4. Metronet : $100MM TLB

5. Avianca : $1.3B DIP DD TLB

6. MAG Aerospace: $290.7MM TL (B3/B)

7. CJ Foods Inc.: $285MM TLB

8. Avianca : $1.3B DIP DD TLB

9. UPC/Sunrise: $2.4B term loans (B1/BB-/BB+): $1.2B TLB1; $1.2B TLB2

10. MAG Aerospace: $290.7MM TL (B3/B)

Additional Commentary

NEW ISSUANCE WATCH: Tenet Healthcare Corp issued 2500MM in notes.
Top Widening Loans Top Narrowing Loans
Globalfoundries Inc. (USD) TLB L+400 06/05/2026
Verifone Inc. (USD) TL L+400 08/20/2025
Sandvine Corp. (USD) TL 10/15/2026
BCP Renaissance LLC (USD) TLB L+350 10/31/2024
Cyxtera Technologies (USD) TL L+300 05/01/2024
Wynn Resorts LTD. (USD) TL L+170 07/24/2025
Global Tel Link Corp. (USD) TL L+425 11/29/2025
Web.com Group Inc. (USD) TL L+375 10/11/2025
GGP Inc. (USD) TLB L+250 08/24/2025
Shutterfly Inc. (USD) TLB L+650 10/02/2026

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 15 bp (basis points), as of 09/01/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
September 1, 2020
Bond Markets

ONCE AGAIN EUROPE’S MARKETS ARE DOWN WHILE US MARKETS ARE UP AS THE US DOLLAR CONTINUES TO WEAKEN AGAINST THE EURO. 10 Year Treasury notes were down 1.2 bps. S&P +0.67%, Dow -0.22%, NASDAQ +0.68%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 25.8 MILLION+ CASES AND 858000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 6.25 MILLION+ CASES AND 189000+ 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
+   CVS Health Corp. 1.75% 8/21/2030 +0.5%
  JPMorgan Chase & Co. 2.522% 4/22/2031 +0.6%
  Takeda Pharmaceutical Co. LTD 3.175% 7/9/2050 +0.3%
  AT&T Inc. 5.45% 3/1/2047 +1.9%
  CVS Health Corp. 5.05% 3/25/2048 +1.2%
–   United Parcel Service Inc. 3.125% 1/15/2021 -0.0%
  BP Capital Markets PLC 3.633% 4/6/2030 -1.6%
  General Electric Co. 4.35% 5/1/2050 -0.1%
  Fortive Corp. 0.875% 2/15/2022 -0.1%
  Santander UK PLC 2.875% 6/18/2024 -0.0%
CVS Health Corp.   1.75% 8/21/2030
JPMorgan Chase & Co.   2.522% 4/22/2031
Takeda Pharmaceutical Co. LTD   3.175% 7/9/2050
AT&T Inc.   5.45% 3/1/2047
CVS Health Corp.   5.05% 3/25/2048
JP Morgan Chase & Co.   3.2% 6/15/2026
Bank of America Corp.   1.898% 7/23/2031
Alphabet Inc.   2.05% 8/15/2050
United Parcel Service Inc.   3.125% 1/15/2021
Aetna Inc.   2.8% 6/15/2023
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.02% -0.39% -0.51% 5.84% 5.58% 6.15%
Construction 0.05% -0.51% -0.57% 4.15% 4.84% 4.82%
Manufacturing 0.02% -0.37% -1.13% 3.44% 6.71% 7.02%
Transportion, Communication, Electric/Gas -0.03% -0.71% -1.78% 3.84% 7.84% 7.84%
Wholesale -0.00% -0.23% -0.37% 4.72% 6.32% 8.20%
Retail 0.09% -0.51% -1.71% 2.76% 7.85% 8.50%
Finance, Insurance, Real-Estate 0.02% -0.17% -0.33% 3.36% 5.75% 6.47%
Services 0.09% -0.23% -0.91% 3.81% 6.36% 6.54%
Public Administration -0.08% 0.04% -0.27% 0.34% 4.56% 3.88%
Energy 0.04% -0.43% -0.57% 5.07% 4.54% 5.41%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Canadian Western Bank (CAD) 1.57% 9/14/2023 (08/31/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 1.57%.
Additional Commentary

NEW ISSUANCE WATCH:  Canadian Western Bank 500MM issued in notes.
Top Widening Loans Top Narrowing Loans
Globalfoundries Inc. (USD) TLB L+400 06/05/2026
Verifone Inc. (USD) TL L+400 08/20/2025
Sandvine Corp. (USD) TL 10/15/2026
BCP Renaissance LLC (USD) TLB L+350 10/31/2024
Cyxtera Technologies (USD) TL L+300 05/01/2024
Wynn Resorts LTD. (USD) TL L+170 07/24/2025
Global Tel Link Corp. (USD) TL L+425 11/29/2025
Web.com Group Inc. (USD) TL L+375 10/11/2025
GGP Inc. (USD) TLB L+250 08/24/2025
Shutterfly Inc. (USD) TLB L+650 10/02/2026

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 15 bp (basis points), as of 09/01/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

 

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