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North American Bond Research – September 16, 2020

Posted on September 16, 2020
HIGH YIELD BOND RESEARCH
September 16, 2020
Bond Markets

US MARKETS UP AND THEN DOWN AS THE FED STATES IT WILL KEEP RATES AT NEAR ZERO AT LEAST THROUGH 2023. BUXX WEAKENED TO 87.97 AS THE US DOLLAR LOST AGAINST MAJOR CURRENCIES IN LIGHT OF THE FED’S POLICY. 10 Year Treasury notes were up .8 bps. S&P -0.46%, Dow +0.13%, NASDAQ -1.25%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 30 MILLION+ CASES AND 943000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 6.8 MILLION+ CASES AND 201000+ 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
+   Limited Brands Inc. 5.625% 2/15/2022 +2.2%
  Delta Airlines 7.375% 1/15/2026 +0.2%
  NuStar Logistics LP 5.75% 10/1/2025 +0.3%
  Cheniere Corpus Christi Hldgs LLC 5.125% 6/30/2027 +0.1%
  Occidental Petroleum Corp. 2.9% 8/15/2024 +2.9%
–   Broadcom LTD 4.75% 4/15/2029 -0.2%
  Sprint Corp. 7.125% 6/15/2024 -0.3%
  Verisign Inc. 4.75% 7/15/2027 144A -0.3%
  Sprint Nextel Corp. 7.875% 9/15/2023 -0.2%
  Sprint Spectrum LP 7.25% 9/15/2021 -0.1%
Limited Brands Inc.   5.625% 2/15/2022
Delta Airlines   7.375% 1/15/2026
Broadcom LTD   4.75% 4/15/2029
NuStar Logistics LP   5.75% 10/1/2025
Sprint Corp.   7.125% 6/15/2024
Verisign Inc.   4.75% 7/15/2027 144A
Sprint Nextel Corp.   7.875% 9/15/2023
Cheniere Corpus Christi Hldgs LLC   5.125% 6/30/2027
Occidental Petroleum Corp.   2.9% 8/15/2024
Sprint Spectrum LP   7.25% 9/15/2021
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.10% -0.17% 0.19% 4.57% 5.46% 8.81%
Mining -0.12% -1.89% 1.95% 7.29% -6.23% -6.06%
Construction 0.06% 0.20% 5.08% 5.50% 4.13% 6.70%
Manufacturing 0.03% 0.08% 0.34% 4.81% 2.35% 6.49%
Transportion, Communication, Electric/Gas -0.03% -0.53% 0.35% 3.43% 3.96% 6.31%
Wholesale -0.03% -0.11% -0.79% 2.88% 1.82% 4.96%
Retail -0.02% 0.59% 1.80% 6.02% 2.10% 4.94%
Finance, Insurance, Real-Estate -0.02% 0.18% 1.12% 4.99% 2.24% 5.14%
Services 0.02% 0.15% 1.02% 4.82% 4.59% 6.06%
Public Administration 0.11% 0.77% 2.17% 7.92% 8.00% 11.27%
Energy -0.13% -1.81% -0.07% 4.74% -8.47% -4.43%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Park Intermediate Hldg LLC (USD) 5.875% 10/1/2028 144A (09/15/2020): 725MM Secured Notes, Price at Issuance 100, Yielding 5.88%.

2. Altice France (USD) 5.125% 1/15/2029 144A (09/15/2020): 475MM Secured Notes, Price at Issuance 100, Yielding 5.13%.

3. Cheniere Energy Inc. (USD) 4.625% 10/15/2028 Reg S (09/15/2020): 2000MM Secured Notes, Price at Issuance 100, Yielding 4.63%.

4. Nexstar Broadcasting Group Inc. (USD) 4.75% 11/1/2028 Reg S (09/15/2020): 1000MM Senior Unsecured Notes, Price at Issuance 100, Yielding 4.75%.

5. Qorvo Inc. (USD) 3.375% 4/1/2031 Reg S (09/15/2020): 700MM Senior Unsecured Notes, Price at Issuance 100, Yielding 3.38%.

6. Cablevision Lightpath LLC (USD) 3.875% 9/15/2027 Reg S (09/15/2020): 450MM Secured Notes, Price at Issuance 100, Yielding 3.88%.

7. Cablevision Lightpath LLC (USD) 5.625% 9/15/2028 Reg S (09/15/2020): 415MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.63%.

8. Specialty Building Products Hldg LLC (USD) 6.375% 9/30/2026 Reg S (09/15/2020): 600MM Secured Notes, Price at Issuance 100, Yielding 6.38%.

9. Cheniere Energy Inc. (USD) 4.625% 10/15/2028 144A (09/15/2020): 2000MM Secured Notes, Price at Issuance 100, Yielding 4.63%.

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

2. Omnitracs LLC: $355MM TLs: $160MM TL (B2/B-); $195MM TL (Caa2/CCC)

3. Allegro Microsystems Inc.: $325MM TL

4. ECI Software Solutions: $990MM TLs: $710MM TL (B2/B-); $280MM TL (Caa2/CCC)

5. Michael Cos Inc.: $1.62B TLB (B+)

6. Cablevision Lightpath: $600MM TL (B1/B+)

7. EFS Cogen Holdings LLC: $1.05B credit facilities: $100MM revolver (Ba2/BB-); $950MM TLB (Ba3/BB-)

8. MAG Aerospace: $290.7MM TL (B3/B)

9. CJ Foods Inc.: $285MM TLB

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

Additional Commentary

NEW ISSUANCE WATCH:  Park Intermediate Hldg LLC   issued 725MM in notes
Top Widening Loans Top Narrowing Loans
Casper Bidco (EUR) TL E+850 07/30/2027
Mavenir Inc. (USD) TLB L+600 05/08/2025
Unifrax Corp. (USD) TL2 L+850 12/14/2026
Laird PLC (USD) TL L+450 05/04/2025
Advanced Computer Software Group (USD) TLB L+425 10/09/2026
NCL Corp. LTD (USD) TLA L+150 01/02/2024
DigiCert Inc. (USD) TL2 10/16/2027
Tacala LLC (USD) TLB L+350 02/05/2027
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
Valeo Foods Group LTD (GBP) TL L+850 08/27/2028

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 09/16/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
September 16, 2020
Bond Markets

US MARKETS UP AND THEN DOWN AS THE FED STATES IT WILL KEEP RATES AT NEAR ZERO AT LEAST THROUGH 2023. BUXX WEAKENED TO 87.97 AS THE US DOLLAR LOST AGAINST MAJOR CURRENCIES IN LIGHT OF THE FED’S POLICY. 10 Year Treasury notes were up .8 bps.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 30 MILLION+ CASES AND 943000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 6.8 MILLION+ CASES AND 201000+ 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
+   HollyFrontier Corp. 2.625% 10/1/2023 +0.0%
  Boeing Co. 5.805% 5/1/2050 +0.7%
  Takeda Pharmaceutical Co. LTD 3.175% 7/9/2050 +0.4%
  GE Capital Intl. Funding Co. 4.418% 11/15/2035 +1.5%
  FedEx Corp. 4.05% 2/15/2048 +1.8%
–   AT&T Inc. 2.25% 2/1/2032 -0.0%
  Starbucks Corp. 3.5% 11/15/2050 -0.3%
  Flowserve Corp. 3.5% 10/1/2030 -0.3%
  Deutsche Bank AG VAR% 9/18/2031 -0.1%
  Oracle Corp. 3.85% 4/1/2060 -0.2%
HollyFrontier Corp.   2.625% 10/1/2023
Boeing Co.   5.805% 5/1/2050
Takeda Pharmaceutical Co. LTD   3.175% 7/9/2050
GE Capital Intl. Funding Co.   4.418% 11/15/2035
FedEx Corp.   4.05% 2/15/2048
AT&T Inc.   2.25% 2/1/2032
Starbucks Corp.   3.5% 11/15/2050
Flowserve Corp.   3.5% 10/1/2030
Deutsche Bank AG   VAR% 9/18/2031
General Electric Co.   4.35% 5/1/2050
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.11% -0.08% -0.11% 4.13% 5.78% 8.22%
Construction -0.33% -0.25% 0.03% 4.12% 6.75% 9.27%
Manufacturing 0.08% 0.28% 0.15% 3.01% 7.34% 9.79%
Transportion, Communication, Electric/Gas 0.07% 0.13% -0.31% 3.30% 8.63% 11.47%
Wholesale 0.02% 0.30% 0.34% 3.34% 7.00% 10.58%
Retail 0.13% 0.38% -0.09% 2.55% 8.28% 11.41%
Finance, Insurance, Real-Estate 0.08% 0.13% 0.07% 2.53% 6.20% 8.52%
Services 0.12% 0.32% 0.35% 3.16% 6.95% 9.22%
Public Administration 0.27% 0.26% 0.13% 0.53% 5.06% 5.44%
Energy 0.11% -0.12% -0.74% 3.37% 4.77% 7.64%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. CyrusOne (USD) 2.15% 11/1/2030 (09/15/2020): 400MM Senior Unsecured Notes, Price at Issuance 98.795, Yielding 2.28%.

2. AIG Global Funding (USD) 0.9% 9/22/2025 144A (09/15/2020): 500MM Secured Notes, Price at Issuance 99.917, Yielding .92%.

3. AIG Global Funding (USD) 0.9% 9/22/2025 Reg S (09/15/2020): 500MM Secured Notes, Price at Issuance 99.917, Yielding .92%.

4. HSBC Holdings PLC (USD) VAR% 9/22/2028 (09/15/2020): 2000MM Senior Unsecured Notes, Price at Issuance 100.

5. UniCredit SpA (USD) 2.569% 9/22/2026 144A (09/15/2020): 1000MM Senior Non Preferred Notes, Price at Issuance 100, Yielding 2.57%.

6. Hyundai Capital America (USD) 1.8% 10/15/2025 Reg S (09/15/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.811, Yielding 1.84%.

7. Hyundai Capital America (USD) 1.25% 9/18/2023 Reg S (09/15/2020): 1100MM Senior Unsecured Notes, Price at Issuance 99.906, Yielding 1.28%.

8. Hyundai Capital America (USD) 2.375% 10/15/2027 Reg S (09/15/2020): 650MM Senior Unsecured Notes, Price at Issuance 99.973, Yielding 2.38%.

9. Marubeni Corp. (USD) 1.319% 9/18/2025 (09/15/2020): 500MM Senior Unsecured Notes.

10. Dollarama Inc. (CAD) 1.505% 9/20/2027 (09/15/2020): 300MM Senior Unsecured Notes, Price at Issuance 100, Yielding 1.51%.

Additional Commentary

NEW ISSUANCE WATCH: CyrusOne issued 400MM in notes.
Top Widening Loans Top Narrowing Loans
Casper Bidco (EUR) TL E+850 07/30/2027
Mavenir Inc. (USD) TLB L+600 05/08/2025
Unifrax Corp. (USD) TL2 L+850 12/14/2026
Laird PLC (USD) TL L+450 05/04/2025
Advanced Computer Software Group (USD) TLB L+425 10/09/2026
NCL Corp. LTD (USD) TLA L+150 01/02/2024
DigiCert Inc. (USD) TL2 10/16/2027
Tacala LLC (USD) TLB L+350 02/05/2027
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
Valeo Foods Group LTD (GBP) TL L+850 08/27/2028

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 09/16/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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