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North American Bond Research – September 22, 2020

Posted on September 22, 2020
HIGH YIELD BOND RESEARCH
September 22, 2020
Bond Markets

MARKETS STARTED MIXED AND FINISHED UP AS POLITICAL PARTIES FIGHT OVER HOW MUCH STIMULUS MONEY SHOULD BE GIVEN AND TO WHOM? SECOND LOCKDOWN POSSIBLE IN EUROPE. 10 Year Treasury notes were down .7 bps. S&P +1.05%, Dow +0.52%, NASDAQ +1.71%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 31.7 MILLION+ CASES AND 973000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 7.1 MILLION+ CASES AND 205000+ 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
+   Petrobras Global Finance BV 8.75% 5/23/2026 +0.1%
  T-Mobile USA Inc. 3.5% 4/15/2025 144A +0.1%
  Chubb INA Hldgs Inc. 1.375% 9/15/2030 +0.5%
  Sprint Corp. 7.625% 3/1/2026 +0.3%
  T-Mobile USA Inc. 3.75% 4/15/2027 144A +0.1%
–   Newfield Exploration Co. 5.375% 1/1/2026 -1.2%
  HCA Inc. 3.5% 9/1/2030 -0.1%
  T-Mobile USA Inc. 3.875% 4/15/2030 144A -0.3%
  Pacific Gas & Electric Co. 4.75% 2/15/2044 -0.1%
  Methanex Corp. 5.125% 10/15/2027 -1.7%
Petrobras Global Finance BV   8.75% 5/23/2026
Newfield Exploration Co.   5.375% 1/1/2026
T-Mobile USA Inc.   3.5% 4/15/2025 144A
HCA Inc.   3.5% 9/1/2030
Chubb INA Hldgs Inc.   1.375% 9/15/2030
T-Mobile USA Inc.   3.875% 4/15/2030 144A
Sprint Corp.   7.625% 3/1/2026
Pacific Gas & Electric Co.   4.75% 2/15/2044
Methanex Corp.   5.125% 10/15/2027
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 -0.01% 0.18% 0.56% 3.93% 5.11% 7.80%
Mining -0.75% -0.33% 2.07% 3.99% -6.96% -8.95%
Construction -0.17% 0.28% 1.13% 5.15% 4.62% 7.16%
Manufacturing -0.29% -0.11% 0.50% 3.73% 2.75% 6.58%
Transportion, Communication, Electric/Gas -0.28% -0.29% 0.40% 2.35% 3.62% 5.66%
Wholesale -0.15% -0.08% -0.91% 1.29% 0.91% 3.67%
Retail -0.34% -0.05% 1.14% 5.29% 1.99% 4.62%
Finance, Insurance, Real-Estate -0.27% -0.10% 0.62% 3.67% 1.72% 4.17%
Services -0.41% -0.21% 0.92% 3.59% 4.33% 5.27%
Public Administration -0.53% -0.51% 1.24% 5.88% 7.32% 10.56%
Energy -0.78% -0.60% -1.65% 1.77% -9.23% -7.10%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar
1. PM General Purchaser LLC (USD) 9.5% 10/1/2028 144A (09/21/2020): 600MM Secured Notes, Price at Issuance 100, Yielding 9.5%.

2. 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
Vistra Group LTD (USD) TL2 L+725 10/26/2023
SSH Group Hldg Inc. (USD) TL2 L+825 07/30/2026
Advantage Sales & Marketing Inc. (USD) TL2 L+650 07/25/2022
Garrett Motion (USD) TLB L+250 09/27/2025
Garrett Motion (EUR) TLB E+350 09/27/2025
Dubois Chemicals Inc. (USD) TL L+450 09/30/2026
Cvent Inc. (USD) TL L+375 11/02/2024
Duravant LLC (USD) TL L+325 07/25/2024
NSO Group (USD) TL L+700 03/03/2025
Sandvine Corp. (USD) TL 10/15/2026

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

 

INVESTMENT GRADE BOND RESEARCH
September 22, 2020
Bond Markets

MARKETS STARTED MIXED AND FINISHED UP AS POLITICAL PARTIES FIGHT OVER HOW MUCH STIMULUS MONEY SHOULD BE GIVEN AND TO WHOM? SECOND LOCKDOWN POSSIBLE IN EUROPE. 10 Year Treasury notes were down .7 bps. S&P +1.05%, Dow +0.52%, NASDAQ +1.71%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 31.7 MILLION+ CASES AND 973000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 7.1 MILLION+ CASES AND 205000+ 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
+   HSBC Hldg PLC VAR% 9/22/2028 +0.2%
  Boeing Co. 5.15% 5/1/2030 +0.1%
  Oracle Corp. 3.85% 4/1/2060 +0.3%
  Wal-Mart Stores Inc. 3.7% 6/26/2028 +0.0%
  Emerson Electric Co. 0.875% 10/15/2026 +0.1%
–   Morgan Stanley FLT% 1/20/2022 -0.0%
  Dupont de Nemours Inc. 2.169% 5/1/2023 -0.0%
  Boeing Co. 5.93% 5/1/2060 -0.4%
  Johnson & Johnson 2.45% 9/1/2060 -0.2%
  GE Capital Intl. Funding Co. 4.418% 11/15/2035 -0.4%
HSBC Hldg PLC   VAR% 9/22/2028
Boeing Co.   5.15% 5/1/2030
Oracle Corp.   3.85% 4/1/2060
Wal-Mart Stores Inc.   3.7% 6/26/2028
Dupont de Nemours Inc.   2.169% 5/1/2023
Boeing Co.   5.93% 5/1/2060
Johnson & Johnson   2.45% 9/1/2060
Emerson Electric Co.   0.875% 10/15/2026
Morgan Stanley   FLT% 1/20/2022
GE Capital Intl. Funding Co.   4.418% 11/15/2035
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.11% 0.18% -0.14% 3.17% 5.75% 6.94%
Construction -0.23% 0.26% 0.49% 2.87% 5.44% 6.77%
Manufacturing -0.13% 0.11% 0.13% 2.40% 7.43% 8.78%
Transportion, Communication, Electric/Gas -0.14% 0.14% -0.08% 2.52% 8.68% 10.06%
Wholesale -0.04% 0.12% 0.55% 2.62% 7.28% 9.77%
Retail -0.16% 0.16% 0.05% 1.83% 8.27% 10.11%
Finance, Insurance, Real-Estate -0.13% 0.04% 0.08% 1.90% 6.19% 7.75%
Services -0.12% 0.06% 0.23% 2.37% 6.85% 8.16%
Public Administration -0.26% -0.02% -0.23% 0.18% 4.80% 4.92%
Energy -0.16% 0.13% -0.21% 2.31% 4.69% 6.25%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]
1. CU Inc. (CAD) 2.609% 9/28/2050 (09/21/2020): 150MM Senior Unsecured Notes, Price at Issuance 100, Yielding 2.61%.
Additional Commentary

NEW ISSUANCE WATCH: CU Inc issued 150 MM in notes.
Top Widening Loans Top Narrowing Loans
Vistra Group LTD (USD) TL2 L+725 10/26/2023
SSH Group Hldg Inc. (USD) TL2 L+825 07/30/2026
Advantage Sales & Marketing Inc. (USD) TL2 L+650 07/25/2022
Garrett Motion (USD) TLB L+250 09/27/2025
Garrett Motion (EUR) TLB E+350 09/27/2025
Dubois Chemicals Inc. (USD) TL L+450 09/30/2026
Cvent Inc. (USD) TL L+375 11/02/2024
Duravant LLC (USD) TL L+325 07/25/2024
NSO Group (USD) TL L+700 03/03/2025
Sandvine Corp. (USD) TL 10/15/2026

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 14 bp (basis points), as of 09/22/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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