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North American Bond Research – September 14, 2020

Posted on September 14, 2020
HIGH YIELD BOND RESEARCH
September 14, 2020
Bond Markets

BUXX DOLLAR INDEX FELL 26 CENTS TO 88.11 AS THE DOLLAR WEAKENED AGAINST THE EURO. GLOBAL MARKETS WERE MIXED WHILE US MARKETS JUMPED ON A BUNCH OF M&A DEALS AND RESUMPTION OF COVID-19 VACCINE TRIALS. 10 Year Treasury notes were up .2 bps. S&P +1.27%, Dow +1.18%, NASDAQ +1.87%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 29.4 MILLION+ CASES AND 930000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 6.7 MILLION+ CASES AND 199000+ 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
+   Consolidated Communications Hldg Inc. 6.5% 10/1/2022 +1.5%
  NuStar Logistics LP 5.75% 10/1/2025 +0.5%
  Consol Energy Inc. 5.875% 4/15/2022 (1) +0.4%
  Howmet Aerospace Inc. 6.875% 5/1/2025 +0.4%
  Pacific Gas & Electric Co. 4.95% 7/1/2050 +1.6%
–   Occidental Petroleum Corp. 5.875% 9/1/2025 -5.1%
  Occidental Petroleum Corp. 8.875% 7/15/2030 -2.3%
  CBL & Associates LP 5.25% 12/1/2023 -1.6%
  T-Mobile USA Inc. 3.75% 4/15/2027 144A -0.0%
  Occidental Petroleum Corp. 3.5% 8/15/2029 -4.6%
Consolidated Communications Hldg Inc.   6.5% 10/1/2022
Occidental Petroleum Corp.   5.875% 9/1/2025
Occidental Petroleum Corp.   8.875% 7/15/2030
NuStar Logistics LP   5.75% 10/1/2025
CBL & Associates LP   5.25% 12/1/2023
Consol Energy Inc.   5.875% 4/15/2022 (1)
T-Mobile USA Inc.   3.75% 4/15/2027 144A
Howmet Aerospace Inc.   6.875% 5/1/2025
Occidental Petroleum Corp.   3.5% 8/15/2029
CNH Industrial NV   4.375% 11/6/2020
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Agriculture, Forestry, Fishing -0.04% -0.30% -0.04% 3.88% 5.40% 8.56%
Mining -0.37% -1.65% 0.42% 4.85% -10.20% -6.33%
Construction -0.00% 0.05% 0.69% 5.84% 4.27% 6.76%
Manufacturing -0.04% -0.21% -0.31% 4.34% 2.19% 6.24%
Transportion, Communication, Electric/Gas -0.01% -0.73% -0.30% 3.17% 4.00% 6.36%
Wholesale -0.06% -0.27% -1.19% 2.88% 1.78% 4.87%
Retail 0.01% 0.35% 1.47% 5.75% 2.08% 4.86%
Finance, Insurance, Real-Estate -0.00% -0.02% 0.53% 4.90% 2.21% 4.94%
Services -0.03% -0.10% 0.76% 4.31% 4.18% 5.59%
Public Administration 0.02% 0.32% 1.24% 7.08% 7.20% 10.08%
Energy -0.34% -1.59% 0.34% 4.19% -8.68% -4.97%
 
Total returns (non-annualized) by rating, market weighted.

New Issues Forward Calendar

(None Current 09/14/2020)
1. MAG Aerospace: $290.7MM TL (B3/B)

2. CJ Foods Inc.: $285MM TLB

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

4. RCN Grande: $1.19B TLB

5. Allegro Microsystems Inc.: $325MM TL

6. RCN Grande: $1.19B TLB

7. MAG Aerospace: $290.7MM TL (B3/B)

8. CJ Foods Inc.: $285MM TLB

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

10. Avianca : $1.3B DIP DD TLB

Additional Commentary

NEW ISSUANCE WATCH: Nielsen Finance LLC  issued 750MM in notes
Top Widening Loans Top Narrowing Loans
Unifrax Corp. (USD) TL2 L+850 12/14/2026
NCL Corp. LTD (USD) TLA L+150 01/02/2024
Casper Bidco (EUR) TL E+850 07/30/2027
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
New LightSquared LLC (USD) TL PIK L+875 12/07/2020
DigiCert Inc. (USD) TL2 10/16/2027
Yak Mat (USD) TLB L+500 07/11/2025
Tecomet Inc. (USD) TL L+350 05/01/2024
Advantage Sales & Marketing Inc. (USD) TL2 L+650 07/25/2022
Stubhub (USD) TLB L+350 02/13/2027

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 09/14/2020
  • Net negative capital flows into high-yield ETFs & mutual funds

 

INVESTMENT GRADE BOND RESEARCH
September 14, 2020
Bond Markets

BUXX DOLLAR INDEX FELL 26 CENTS TO 88.11 AS THE DOLLAR WEAKENED AGAINST THE EURO. GLOBAL MARKETS WERE MIXED WHILE US MARKETS JUMPED ON A BUNCH OF M&A DEALS AND RESUMPTION OF COVID-19 VACCINE TRIALS. 10 Year Treasury notes were up .2 bps. S&P +1.27%, Dow +1.18%, NASDAQ +1.87%.
CORONA VIRUS UPDATE: GLOBAL CORONAVIRUS TO DATE HAS HAD 29.4 MILLION+ CASES AND 930000+ DEATHS. IN THE UNITED STATES THE CORONAVIRUS COUNT IS 6.7 MILLION+ CASES AND 199000+ 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
+   Oracle Corp. 3.85% 4/1/2060 +0.8%
  Suzano Austria GmbH 3.75% 1/15/2031 +0.4%
  Nvidia Corp. 3.5% 4/1/2050 +3.1%
  Wells Fargo Bank NA 2.6% 1/15/2021 +0.0%
  Walt Disney Co. 2.65% 1/13/2031 +0.1%
–   Oracle Corp. 3.6% 4/1/2050 -0.4%
  General Motors Financial Co. Inc. 3.6% 6/21/2030 -0.6%
  CVS Health Corp. 5.05% 3/25/2048 -0.0%
  Schlumberger Investment 2.65% 6/26/2030 -1.6%
  Johnson Controls Intl PLC 1.75% 9/15/2030 -0.1%
Oracle Corp.   3.6% 4/1/2050
Oracle Corp.   3.85% 4/1/2060
Suzano Austria GmbH   3.75% 1/15/2031
Nvidia Corp.   3.5% 4/1/2050
General Motors Financial Co. Inc.   3.6% 6/21/2030
Wells Fargo Bank NA   2.6% 1/15/2021
CVS Health Corp.   5.05% 3/25/2048
Walt Disney Co.   2.65% 1/13/2031
American Express Co.   3.7% 11/5/2021
Deutsche Bank AG   VAR% 9/18/2024
Industry Returns Tracker
Industry Past Day Past Week Past Month Past Quarter YTD Past Year
Mining -0.05% -0.10% -0.82% 3.68% 5.68% 7.44%
Construction 0.14% -0.20% -0.62% 3.88% 5.67% 7.35%
Manufacturing 0.04% 0.18% -0.81% 2.75% 7.12% 8.80%
Transportion, Communication, Electric/Gas 0.06% -0.01% -1.35% 2.96% 8.50% 10.35%
Wholesale 0.10% 0.20% -0.22% 3.27% 6.82% 9.77%
Retail 0.07% 0.11% -1.09% 2.08% 7.74% 9.63%
Finance, Insurance, Real-Estate 0.00% 0.09% -0.35% 2.40% 6.12% 7.87%
Services 0.06% 0.20% -0.46% 3.06% 6.79% 8.26%
Public Administration -0.20% 0.04% -0.10% 0.33% 4.37% 4.70%
Energy -0.02% -0.18% -0.96% 2.86% 4.70% 6.83%
 
Total returns (non-annualized) by rating, market weighted.

New Issues New Issues [Continued]

(None Current 09/14/2020)
Additional Commentary

NEW ISSUANCE WATCH:  Nissan Motor Co. LTD issued 8000MM in notes.
Top Widening Loans Top Narrowing Loans
Unifrax Corp. (USD) TL2 L+850 12/14/2026
NCL Corp. LTD (USD) TLA L+150 01/02/2024
Casper Bidco (EUR) TL E+850 07/30/2027
Samsonite IP Holdings SARL (USD) TLA L+150 04/19/2023
New LightSquared LLC (USD) TL PIK L+875 12/07/2020
DigiCert Inc. (USD) TL2 10/16/2027
Yak Mat (USD) TLB L+500 07/11/2025
Tecomet Inc. (USD) TL L+350 05/01/2024
Advantage Sales & Marketing Inc. (USD) TL2 L+650 07/25/2022
Stubhub (USD) TLB L+350 02/13/2027

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 09/14/2020
  • Net positive capital flows into high-yield ETFs & mutual funds

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