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North American Bond Research – September 18, 2020

Posted on September 18, 2020
HIGH YIELD BOND RESEARCH
September 18, 2020
Bond Markets

GLOBAL MARKETS DOWN AND HAD A ROTTEN WEEK. SHORT SELLERS SEEM TO BE AIMING AT TECHNOLOGY TO CONTINUE DOWNWARD PRESSURE ON THE MARKETS. 10 Year Treasury notes were up 1 bps. S&P -1.12%, Dow -0.88%, NASDAQ -1.07%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 30.6 MILLION+ CASES AND 955000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 7 MILLION+ CASES AND 203000+ 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
+   Delta Airlines Inc. 2.6% 12/4/2020 +0.3%
  General Motors Co. 5.2% 4/1/2045 +2.0%
  L Brands Inc. 7.5% 6/15/2029 +0.1%
  Broadcom LTD 4.7% 4/15/2025 +0.1%
  Citigroup Inc. 5.95% PERP (1) +1.3%
–   Chubb INA Hldgs Inc. 1.375% 9/15/2030 -0.1%
  Pacific Gas & Electric Co. 4.55% 7/1/2030 -0.2%
  T-Mobile USA Inc. 3.875% 4/15/2030 144A -0.2%
  Crown Castle Intl Corp. 5.25% 1/15/2023 -0.1%
  Oasis Petroleum Inc. 6.875% 3/15/2022 (1) -4.9%
Delta Airlines Inc.   2.6% 12/4/2020
General Motors Co.   5.2% 4/1/2045
Chubb INA Hldgs Inc.   1.375% 9/15/2030
Pacific Gas & Electric Co.   4.55% 7/1/2030
T-Mobile USA Inc.   3.875% 4/15/2030 144A
Oasis Petroleum Inc.   6.875% 3/15/2022 (1)
Crown Castle Intl Corp.   5.25% 1/15/2023
Ball Corp.   2.875% 8/15/2030
JBS Investments GmbH   5.75% 7/30/2028 Reg S
L Brands Inc.   7.5% 6/15/2029
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.02% -0.11% 0.10% 3.75% 5.54% 8.69%
Mining 0.10% -0.74% 1.15% 4.71% -6.31% -7.11%
Construction -0.02% 0.33% 5.08% 5.25% 5.14% 7.89%
Manufacturing -0.07% 0.20% 0.57% 3.69% 2.85% 6.89%
Transportion, Communication, Electric/Gas -0.05% 0.07% 0.55% 2.50% 3.85% 6.12%
Wholesale -0.06% 0.02% -0.87% 1.87% 2.12% 5.18%
Retail -0.07% 0.34% 2.21% 5.58% 2.17% 4.98%
Finance, Insurance, Real-Estate -0.06% 0.21% 1.47% 4.10% 1.74% 4.38%
Services -0.05% 0.29% 1.46% 3.83% 2.78% 5.78%
Public Administration -0.16% 0.68% 2.08% 6.57% 7.94% 11.17%
Energy 0.06% -0.80% -1.03% 2.50% -8.89% -5.78%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. Vivo Energy Investment (USD) 5.125% 9/24/2027 144A (09/17/2020): 350MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.13%.

2. Oppenheimer Hldgs Inc. (USD) 5.5% 10/1/2025 144A (09/17/2020): 125MM First Lien Notes, Price at Issuance 100, Yielding 5.5%.

3. Reynolds Group (USD) 4% 10/15/2027 144A (09/17/2020): 1000MM Secured Notes, Price at Issuance 100, Yielding 4%.

4. Michaels Stores Inc. (USD) 4.75% 10/1/2027 Reg S (09/17/2020): 375MM Secured Notes, Price at Issuance 100, Yielding 4.75%.

5. Alliance Data Systems Corp. (USD) 7% 1/15/2026 Reg S (09/17/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 7%.

6. Alliance Data Systems Corp. (USD) 7% 1/15/2026 144A (09/17/2020): 500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 7%.

7. Methanex Corp. (USD) 5.125% 10/15/2027 (09/17/2020): 700MM Senior Unsecured Notes, Price at Issuance 100, Yielding 5.13%.

8. First Quantum Minerals LTD (USD) 6.875% 10/15/2027 144A (09/17/2020): 1500MM Senior Unsecured Notes, Price at Issuance 100, Yielding 6.88%.

9. Michaels Stores Inc. (USD) 4.75% 10/1/2027 144A (09/17/2020): 375MM Secured Notes, Price at Issuance 100, Yielding 4.75%.

10. Reynolds Group (USD) 4% 10/15/2027 Reg S (09/17/2020): 1000MM Secured Notes, Price at Issuance 100, Yielding 4%.

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

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

3. MAG Aerospace: $290.7MM TL (B3/B)

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

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

6. Amwins Group Inc.: $100MM TLB (Ba3/B+)

7. Allegro Microsystems Inc.: $325MM TL

8. Michaels Cos Inc.: $1.62B TLB (B+)

9. Allegro Microsystems Inc.: $325MM TL

10. Amwins Group Inc.: $100MM TLB (Ba3/B+)

Additional Commentary

NEW ISSUANCE WATCH:  Vivo Energy Investment issued 350MM in notes
Top Widening Loans Top Narrowing Loans
NCL Corp. LTD (USD) TLA L+150 01/02/2024
Wittur (EUR) TL E+850 09/19/2027
Archroma Global Services (USD) TLB2 L+425 07/11/2024
24 Hour Fitness Worldwide Inc. (USD) DIP DD L+1000 06/16/2021
Kirk Beauty Zero GmbH (EUR) RC E+375 12/26/2021
Distributed Power Inc. (USD) TLB L+325 11/02/2025
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
Aimbridge Hospitality LLC (USD) TLB L+375 02/01/2026
Stubhub (USD) TLB L+350 02/13/2027
Nets Hldgs AS (NOK) TLB1N L+400 02/06/2025

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 15 bp (basis points), as of 09/18/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
September 18, 2020
Bond Markets

GLOBAL MARKETS DOWN AND HAD A ROTTEN WEEK. SHORT SELLERS SEEM TO BE AIMING AT TECHNOLOGY TO CONTINUE DOWNWARD PRESSURE ON THE MARKETS. 10 Year Treasury notes were up 1 bps. S&P -1.12%, Dow -0.88%, NASDAQ -1.07%..
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 30.6 MILLION+ CASES AND 955000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 7 MILLION+ CASES AND 203000+ 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
+   Flowserve Corp. 3.5% 10/1/2030 +0.1%
  GE Capital Intl. Funding Co. 4.418% 11/15/2035 +0.7%
  JPMorgan Chase & Co. 2.522% 4/22/2031 +0.1%
  Shell Intl Finance BV 3.25% 4/6/2050 +0.6%
  GlaxoSmithKline Capital PLC 2.875% 6/1/2022 +0.1%
–   Ares Capital Corp. 3.875% 1/15/2026 -0.3%
  CVS Health Corp. 5.05% 3/25/2048 -0.0%
  Royal Bank of Canada 1.6% 4/17/2023 -0.0%
  Coca-Cola Co. 2.5% 3/15/2051 -0.5%
  General Motors Co. 6.8% 10/1/2027 -0.3%
Flowserve Corp.   3.5% 10/1/2030
Ares Capital Corp.   3.875% 1/15/2026
CVS Health Corp.   5.05% 3/25/2048
GE Capital Intl. Funding Co.   4.418% 11/15/2035
Royal Bank of Canada   1.6% 4/17/2023
Coca-Cola Co.   2.5% 3/15/2051
JPMorgan Chase & Co.   2.522% 4/22/2031
Oracle Corp.   3.6% 4/1/2050
General Motors Co.   6.8% 10/1/2027
Shell Intl Finance BV   3.25% 4/6/2050
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining 0.08% 0.12% 0.35% 3.32% 5.75% 7.59%
Construction 0.06% 0.26% 0.41% 3.92% 6.92% 9.00%
Manufacturing 0.05% 0.28% 0.58% 2.67% 7.54% 9.64%
Transportion, Communication, Electric/Gas 0.09% 0.34% 0.22% 2.92% 8.72% 11.06%
Wholesale 0.07% 0.28% 0.67% 2.68% 7.11% 10.28%
Retail 0.03% 0.35% 0.07% 2.13% 8.51% 11.13%
Finance, Insurance, Real-Estate 0.02% 0.14% 0.31% 2.10% 6.30% 8.30%
Services 0.06% 0.27% 0.66% 2.69% 6.91% 8.74%
Public Administration 0.01% -0.03% 0.30% 0.57% 5.05% 5.28%
Energy 0.08% 0.13% -0.27% 2.61% 4.82% 7.08%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. Sharp Healthcare (USD) 2.68% 8/1/2050 (09/17/2020): 300MM Unsecured Notes, Price at Issuance 100, Yielding 2.68%.

2. Duquesne Light Holdings Inc. (USD) 2.532% 10/1/2030 Reg S (09/17/2020): 350MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.53%.

3. Duquesne Light Holdings Inc. (USD) 2.532% 10/1/2030 144A (09/17/2020): 350MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.53%.

4. Vancouver Airport Authority (CAD) 2.8% 9/21/2050 (09/17/2020): 350MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.8%.

5. Athene Global Funding (CAD) 2.1% 9/24/2025 (09/17/2020): 500MM Secured Notes, Price at Issuance 99.877, Yielding 2.13%.

6. Emerson Electric Co. (USD) 0.875% 10/15/2026 (09/17/2020): 750MM Senior Unsecured Notes, Price at Issuance 99.712, Yielding .92%.

7. Quanta Services Inc. (USD) 2.9% 10/1/2030 (09/17/2020): 1000MM Senior Unsecured Notes, Price at Issuance 99.663, Yielding 2.94%.

8. EDP Finance BV (USD) 1.71% 1/24/2028 144A (09/17/2020): 850MM Senior Unsecured Notes, Price at Issuance 99.96, Yielding 1.72%.

9. Brown & Brown Inc. (USD) 2.375% 3/15/2031 (09/17/2020): 700MM Senior Unsecured Notes, Price at Issuance 99.89, Yielding 2.39%.

10. Cooperatieve Rabobank U.A. (USD) 1.004% 9/24/2026 144A (09/17/2020): 1000MM Senior Non Preferred Notes, Price at Issuance 100, Yielding 1%.

Additional Commentary

NEW ISSUANCE WATCH: Sharp Healthcare issued 300MM in notes.
Top Widening Loans Top Narrowing Loans
NCL Corp. LTD (USD) TLA L+150 01/02/2024
Wittur (EUR) TL E+850 09/19/2027
Archroma Global Services (USD) TLB2 L+425 07/11/2024
24 Hour Fitness Worldwide Inc. (USD) DIP DD L+1000 06/16/2021
Kirk Beauty Zero GmbH (EUR) RC E+375 12/26/2021
Distributed Power Inc. (USD) TLB L+325 11/02/2025
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
Aimbridge Hospitality LLC (USD) TLB L+375 02/01/2026
Stubhub (USD) TLB L+350 02/13/2027
Nets Hldgs AS (NOK) TLB1N L+400 02/06/2025

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 15 bp (basis points), as of 09/18/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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