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North American Bond Research – September 21, 2020

Posted on September 21, 2020
HIGH YIELD BOND RESEARCH
September 21, 2020
Bond Markets

MARKET LOSING STREAK LONGEST SINCE FEBRUARY. NO NEW STIMULUS IS FORTHCOMING DUE TO THE POLITICAL SEASON AND MOUNTING POLITICAL TENSION AND UNCERTAINTY. 10 Year Treasury notes were down 2.3 bps. S&P -1.16%, Dow -1.84%, NASDAQ -0.13%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 31.4 MILLION+ CASES AND 968000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 7.0 MILLION+ CASES AND 204000+ 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
+   Accuray Inc. 3.75% 7/15/2022 +3.1%
  Consolidated Communications Hldg Inc. 6.5% 10/1/2022 +0.3%
  iStar Inc. 4.75% 10/1/2024 +0.4%
  Occidental Petroleum Corp. 4.625% 6/15/2045 +6.2%
  Hilton Domestic Operating Co. 4.25% 9/1/2024 (1) +0.1%
–   Petrobras Global Finance BV 6.85% 6/5/2115 -1.8%
  HCA Inc. 3.5% 9/1/2030 -1.7%
  T-Mobile USA Inc. 3.875% 4/15/2030 144A -0.3%
  Apache Corp. 4.75% 4/15/2043 -1.9%
  Delta Airlines 7.375% 1/15/2026 -1.7%
Petrobras Global Finance BV   6.85% 6/5/2115
HCA Inc.   3.5% 9/1/2030
T-Mobile USA Inc.   3.875% 4/15/2030 144A
Apache Corp.   4.75% 4/15/2043
Delta Airlines   7.375% 1/15/2026
Broadcom LTD   4.7% 4/15/2025
Centene Corp.   4.25% 12/15/2027
Sprint Nextel Corp.   7.875% 9/15/2023
Carpenter Technology   6.375% 7/15/2028
Vale Overseas LTD   3.75% 7/8/2030
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing 0.02% 0.02% 0.26% 4.11% 5.65% 8.90%
Mining 0.07% -0.32% 1.43% 5.32% -6.07% -6.91%
Construction 0.01% 0.50% 5.36% 4.95% 4.66% 7.16%
Manufacturing 0.00% 0.35% 0.80% 4.08% 2.79% 6.73%
Transportion, Communication, Electric/Gas -0.04% 0.01% 0.77% 2.67% 3.55% 5.68%
Wholesale -0.05% 0.07% -0.87% 1.17% 1.15% 3.91%
Retail -0.02% 0.27% 1.92% 5.69% 2.38% 5.10%
Finance, Insurance, Real-Estate -0.02% 0.21% 1.46% 4.14% 1.74% 4.30%
Services -0.03% 0.31% 1.42% 4.06% 4.72% 5.61%
Public Administration -0.07% 0.49% 1.89% 6.57% 7.86% 11.49%
Energy 0.04% -0.32% -0.41% 3.05% -8.49% -5.56%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. PM General Purchaser LLC (USD) 9.5% 10/1/2028 Reg S (09/21/2020): 600MM Secured Notes, Price at Issuance 100, Yielding 9.5%. 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:  PM General Purchaser LLC  issued 600 MM in notes.
Top Widening Loans Top Narrowing Loans
Casper Bidco (EUR) TL E+850 07/30/2027
Compass IV LTD (EUR) TL E+800 05/09/2026
MedPlast Inc. (USD) TL L+775 06/26/2026
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
Drive Chassis Holdco LLC (USD) TL L+825 04/12/2026
Wireco Worldgroup Inc. (USD) TL L+500 09/30/2023
Stubhub (USD) TLB L+350 02/13/2027
Hanjin Intl. Corp. (USD) TLB L+250 09/20/2020
Alera Group Holdings Inc. (USD) TLB L+450 08/01/2025
Lifemiles LTD (USD) TLB L+550 08/17/2022

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 14 bp (basis points), as of 09/21/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
September 21, 2020
Bond Markets

MARKET LOSING STREAK LONGEST SINCE FEBRUARY. NO NEW STIMULUS IS FORTHCOMING DUE TO THE POLITICAL SEASON AND MOUNTING POLITICAL TENSION AND UNCERTAINTY. 10 Year Treasury notes were down 2.3 bps. S&P -1.16%, Dow -1.84%, NASDAQ -0.13%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 31.4 MILLION+ CASES AND 968000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 7.0 MILLION+ CASES AND 204000+ 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 +0.1%
  General Motors Co. 5.95% 4/1/2049 +0.7%
  Quanta Services Inc. 2.9% 10/1/2030 +0.2%
  Cummins Inc. 2.6% 9/1/2050 +0.0%
  Ally Financial Inc. 1.45% 10/2/2023 +0.2%
–   HSBC Hldg PLC VAR% 9/22/2028 -1.3%
  Deutsche Bank AG VAR% 9/18/2031 -0.7%
  Southern Co. 4% 1/15/2051 -0.6%
  Brown & Brown Inc. 2.375% 3/15/2031 -0.2%
  Wells Fargo & Co. VAR% 4/4/2031 -0.6%
HSBC Hldg PLC   VAR% 9/22/2028
Deutsche Bank AG   VAR% 9/18/2031
Southern Co.   4% 1/15/2051
CVS Health Corp.   1.75% 8/21/2030
General Motors Co.   5.95% 4/1/2049
Brown & Brown Inc.   2.375% 3/15/2031
Wells Fargo & Co.   VAR% 4/4/2031
Anheuser-Busch Inbev Worldwide Inc.   4.9% 2/1/2046
Wal-Mart Stores Inc.   3.4% 6/26/2023
Marriott Intl Inc.   5.75% 5/1/2025
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.03% 0.19% 0.10% 3.36% 5.87% 7.42%
Construction -0.04% 0.55% 0.58% 3.31% 6.47% 8.37%
Manufacturing -0.01% 0.24% 0.42% 2.57% 7.60% 9.42%
Transportion, Communication, Electric/Gas -0.00% 0.30% 0.25% 2.78% 8.85% 10.82%
Wholesale -0.02% 0.17% 0.55% 2.60% 7.15% 9.91%
Retail 0.03% 0.30% 0.34% 2.04% 8.72% 10.99%
Finance, Insurance, Real-Estate -0.00% 0.13% 0.24% 1.98% 6.30% 8.09%
Services -0.02% 0.18% 0.59% 2.62% 6.87% 8.40%
Public Administration 0.00% 0.20% 0.12% 0.52% 4.85% 5.42%
Energy -0.01% 0.17% 0.05% 2.59% 4.92% 6.95%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]

(None Current 09/21/2020)
Additional Commentary

NEW ISSUANCE WATCH: No new issues.
Top Widening Loans Top Narrowing Loans
Casper Bidco (EUR) TL E+850 07/30/2027
Compass IV LTD (EUR) TL E+800 05/09/2026
MedPlast Inc. (USD) TL L+775 06/26/2026
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
Drive Chassis Holdco LLC (USD) TL L+825 04/12/2026
Wireco Worldgroup Inc. (USD) TL L+500 09/30/2023
Stubhub (USD) TLB L+350 02/13/2027
Hanjin Intl. Corp. (USD) TLB L+250 09/20/2020
Alera Group Holdings Inc. (USD) TLB L+450 08/01/2025
Lifemiles LTD (USD) TLB L+550 08/17/2022

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 14 bp (basis points), as of 09/21/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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