FT : Another Rubicon crossed: a 10-year junk bond below 3%

Another Rubicon crossed: a 10-year junk bond below 3%
Ball Corporation secures record-low borrowing costs for non-investment grade US company

Aluminium can maker Ball Corporation secured the lowest-ever borrowing costs for a US junk-rated company on Monday, as investors starved of returns shrugged off lingering concerns over Covid-19 in their pursuit for higher yields.

Ball raised $1.3bn through a 10-year bond, paying an annual coupon of 2.875 per cent, according to people familiar with the terms. It was the lowest borrowing cost clinched in the junk debt market for a 10-year bond, according to financial data provider Refinitiv.

The strong investor demand followed the best month for high-yield bonds since 2011 in July. A rally in junk debt has erased the losses investors suffered at the depths of the coronavirus induced sell-off in March.

At double-B plus, Ball holds the highest junk rating assigned by the big credit rating agencies, one notch below the threshold to be considered investment grade. Investor appetite for Ball’s bond allowed bankers — led by Goldman Sachs — to lower the coupon below 3 per cent and increase the size of the deal from a planned $1bn.

“This is another sign of the insatiable hunger for yield the world is currently facing,” said John McClain, a portfolio manager at Diamond Hill Capital Management.


Companies have secured a number of record-low borrowing costs in quick succession this year as financial markets have recovered. Amazon locked in the lowest coupons on three-, seven- and 10-year US investment-grade corporate bonds in June, but was usurped by Google-owner Alphabet in early August. Alphabet agreed to pay just 1.1 per cent per year on new 10-year debt last week.

One of those records was broken again on Monday as Visa raised cash. The credit card company borrowed $500m through new seven-year debt with a coupon of just 0.75 per cent, undercutting Alphabet by 0.05 percentage points on its recently issued seven-year notes.

The average yield on junk bonds has plummeted from more than 11 per cent to 5.36 per cent, according to Ice Data Services, but are still markedly above investment-grade bonds.

>>> What to look at today - 11th of August 2020


U.S. futures climbed and Asian stocks gained the most in a week on Tuesday after a drop in coronavirus hospitalizations in some U.S. states, even as global cases topped 20 million. The dollar slipped.
Japanese and Hong Kong equities rose more than 2%. Shares advanced in Australia and South Korea. S&P 500 futures rose, putting the benchmark on course to approach its all-time high from February. European contracts advanced. Yields on 10-year Treasuries hovered near two-week highs.
US After Hours JCOM +14%, ICUI +6.8% up on earnings; PFNX +59.5% to be acquired; TLRY -10%, OMER -9.8% lower on earnings

Nikkei +1.88% Hang Seng +2.58% CSI +0.82% Shanghai +0.52% Shenzen +0.34%

Eur$ 1.1744 CNH 6.9532 CNY 6.9560 JPY 106.13 GBP 1.3071 CHF 0.9153 RUB 73.3795 WTI$ 42.27 +0.79%

Macro :
- Cases Top 20 Million; German Infections Rise: Virus Update

Keep an eye on :
- AOX GY : Alstria Office First Half Revenue EU87.2 Mln, -6.3% Y/y
- ARYN SW : Aryzta July Trading Continues to Improve in Line With Views
- NDA GY : Aurubis Forecasts Pretax Oper Profit
- BSLN SW : Basilea First Half Revenue Beats Estimates
- BP/ LN : BP Is Said to Explore Sale of German Chemicals Unit DHC Solvent
- CCAP GY : Corestate First Half Ebitda EU25.9 Mln, -62% Y/y
- DAE SW : Daetwyler First Half Net Revenue CHF545.7 Mln, -23% Y/y
- DEZ GY : Deutz Second Quarter Adjusted Ebit Loss Wider Than Estimates
- EDPR PL : EDPR Sells Stake in Spanish Wind-Farm Portfolio For EU426m
- FCA IM : Fiat Chrysler Asks Judge to Deny GM Effort to Revive Lawsuit
- HFG GY : HelloFresh 2Q Adj. Ebitda Margin 15.8%, Sees FY Margin of 9%-11%~
- HBH GY : Hornbach Holding Sees FY Adjusted Ebit EU230 Mln to EU330 Mln
- IMPN SW : Implenia Secures New Building Construction Projects in Germany
- JUN3 GY : Jungheinrich Second Quarter Net Income EU27.9 Mln, -36% Y/y
- LHA GY : Germany Considers More Stakes After Lufthansa Investment: HB
- MOLN SW : Switzerland, Molecular in Pact for Early Access to Covid Drug
- QIA GY : Qiagen May Have Other Suitors If Thermo Fisher Fails, CTFN Says
- RBI AV : RBI Second Quarter Net Income Beats Estimates
- SQN SW : Swissquote 1H Pretax Profit CHF58.4 Mln Vs. CHF25.1 Mln Y/y
- TSLA US : Tesla Sold 11,014 Vehicles in July in China: PCA
- TWEKA NA : TKH Sees Full Year Adjusted Net EU63 Mln to EU69 Mln
- ZAL GY : Zalando 2Q Adjusted Ebit EU211.9 Mln Vs. EU101.7 Mln Y/y

>>> US After Hours Summary: JCOM +14%, ICUI +6.8% up on earnings;

After Hours Summary: JCOM +14%, ICUI +6.8% up on earnings; PFNX +59.5% to be acquired; TLRY -10%, OMER -9.8% lower on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: SCOR +19.8%, KFRC +15.8%, JCOM +14%, GSKY +13.6%, QRTEA +7.4%, ICUI +6.8% (also signs long-term US distribution deal with GRFS), DHT +5.5%, UNIT +4.6%, CSOD +4.2%, STAY +4%, ADUS +3.6%, IART +3.3%, MESA +3.2%, NHI +2.7%, GO +2.4%, WES +2.4%, TME +2.2%, TCO +2.1%, ESPR +1.9%, ADPT +1.7%, NTR +1.7%, ADVM +1.7%, XPER +1.4%, PRA +0.5%, KAMN +0.3%

Companies trading higher in after hours in reaction to news: PFNX +59.5% (to be acquired by LGND), EQ +31.3% (announces "positive" interim data with itolizumab in EQUATE study), MVC +15% (to merge with BBDC), GNSS +7.4% (to acquire of Amika Mobile; also files for mixed shelf offering), ADVM +4.2% (positive interim data from Phase 1 Trial of ADVM-022), TME +2.2% (Tencent Music and Universal Music announce multi-year extension of licensing agreement), BBDC +1.2% (to merge with MVC), CALA +0.8% (files for $250 mln mixed shelf offering), QDEL +0.6% (says Maryland now allows for COVID testing even without symptoms), CFG +0.4% (Fed has decided not to change prior decision on DFAST ruling), QGEN +0.2% (announces new commercialization and distribution agreement with HTGM), GD +0.2% (awarded $430 mln Army contract), CNS +0.1% (reports July assets under mgmt), GPK +0.1% (announces second $250 mln acquisition of IP's minority partnership interest), AMK +0.1% (issues July report), CUK +0.1% (announces upcoming voyage cancellations for three Seabourn ships)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: NGL -12.9%, TLRY -10%, OMER -9.8% (also announces stock offering), IPAR -9.6%, IFF -7.5%, INO -7.4%, ANGI -5.8%, OXY -5.8%, CNXN -5.7%, QLYS -5.2%, IAC -3.5%, ZI -3.5%, HALO -3.1%, NSTG -3%, RAMP -1.4%, SPG -0.9%, RUN -0.8%, AKBA -0.7%, RPAY -0.6%, ESE -0.1%

Companies trading lower in after hours in reaction to news: SPT -6.3% (stock offering), SDGR -5.1% (stock offering), BBBY -4.8% (lifts suspension of planned debt reduction; also says July comps were posiitve), OCFT -3.6% (stock offering), PRFT -3.5% (convertible notes offering), GTT -2.7% (delays 10-Q filing), AVYA -2.6% (stock offering), LYFT -2.1% (unfavorable court ruling in California case), NVAX -2.1% (expands partnership with AGC Biologics), UPLD -2.1% (stock offering), UBER -1.5% (unfavorable court ruling in California case), KKR -1.4% (convertible preferred offering), FTK -1.3% (delays 10-Q filing), W -1.3% (convertible offering), FND -0.8% (stock offering), NTES -0.5% (NetEase Cloud Music enters into licensing agreement with Universal Music Group in China), ADAP -0.4% (files for $200 mln mixed shelf offering), FE -0.2% (delays 10-Q filing), MTCH -0.2% (files mixed securities shelf offering)

>>> TradeGate Pre-MArket Indication

DAX:
  • Infineon (IFX TH) +1.7%
  • Deutsche Bank (DBK TH) +1.4%
  • Bayer (BAYN TH) +1.3%
  • VW (VOW3 TH) +1.2%
  • Adidas (ADS TH) +1.2%
  • Wirecard (WDI TH) -2.5%
MDAX:
  • HelloFresh (HFG TH) +8.6%
    • HelloFresh 2Q Adj. Ebitda Margin 15.8%, Sees FY Margin of 9%-11%
  • Zalando (ZAL TH) +3.5%
    • Zalando 2Q Adjusted Ebit EU211.9 Mln Vs. EU101.7 Mln Y/y
  • K+S (SDF TH) +2.2%
  • Evotec SE (EVT TH) +1.9%
  • Alstria Office (AOX TH) +1.7%
SDAX:
  • Suedzucker (SZU TH) +2.8%
    • Suedzucker Raised to Buy at Commerzbank; PT 19 euros
  • Hamburger Hafen (HHFA TH) +2.7%
  • Steinhoff (SNH TH) +2.3%
  • Borussia Dortmund (BVB TH) +1.7%
    • Dortmund Will Not Let ManU Target Jadon Sancho Leave the Club
  • Salzgitter (SZG TH) +1.4%
  • Corestate (CCAP TH) -0.7%
    • Corestate First Half Ebitda EU25.9 Mln, -62% Y/y
  • Deutz (DEZ TH) -2.2%
    • Deutz Second Quarter Adjusted Ebit Margin -13.6%

>>> Europe : Brokers Upgrades & Downgrades - 11th August 2020

>>> Up
* 3i Raised to Overweight at Morgan Stanley; PT 1,060 pence
* Addiko Raised to Hold at Raiffeisen Centrobank; PT 7.20 euros
* Covestro Raised to Add at Baader Helvea; PT 40 euros
* Elementis Raised to Buy at Jefferies; PT 95 pence
* Ferrexpo Raised to Neutral at JPMorgan; PT 240 pence
* HSBC Raised to Equal-Weight at Morgan Stanley; PT 360 pence
* Philips PT Raised to 58 euros from 55 euros at Commerzbank
* RBI Raised to Buy at Biuro Maklerskie mBanku; PT 17.67 euros
* Thales Raised to Overweight at JPMorgan; PT 88 euros

>>> Down
* Henkel Cut to Sell at Nord/LB; PT 68 euros
* I-RES Cut to Hold at Berenberg; PT 1.50 euros
* Olvi Cut to Hold at SEB Equities; PT 44 euros

>>> Initiation
* Azimut Reinstated Neutral at Goldman; PT 18 euros
* Banca Generali Reinstated Buy at Goldman; PT 30 euros
* FinecoBank Rated New Buy at Goldman; PT 14.80 euros
* Mediolanum Reinstated Neutral at Goldman; PT 7 euros
* Prosus Rated New Buy at Deutsche Bank; PT 105 euros

>>> Call
* 3i Upgraded, Amundi Outlook Clouded by Dividend: Morgan Stanley

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance:

  • RETA -8.5%, SEAS -5.4%, MAR -2.6%, RDN -2%, GVA -1.3%, FOLD -0.5%

Other news:

  • XFOR -1.8% (files for $150 mln mixed securities shelf offering)
  • HCM -1.1% (receives Scientific Advice from EMA's CHMP; plans to submit Marketing Authorization Application for Surufatinib) .

Analyst comments:

  • TS -1.7% (downgraded to Underweight from Equal Weight at Barclays)
  • TRUP -1.6% (downgraded to Neutral from Buy at Guggenheim)
  • OLN -1.2% (downgraded to Neutral from Buy at BofA Securities)
  • RYN -0.6% (downgraded to Neutral from Buy at Citigroup)

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance:

  • FL +20.5%, GOGO +11.4%, CEVA +9.5%, CGC +8%, SDGR +6.5%, AVYA +6.1%, TGNA +5%, ICPT +4.6%, TGTX +3.7%, AXSM +3.1%, WSC +2.2%, GOLD +1.9%, DUK +1.6%, ON +1.5%, MNTA +1.1%

Other news:

  • MCRB +311.9% (announces positive topline results from SER-109 Phase 3 ECOSPOR III study)
  • TRVN +55% (announces FDA approval of OLINVYK (oliceridine) injection)
  • MJCO +22.6% (to be acquired by Thoma Bravo for $16.00 per share)
  • IBIO +13.2% (provided an update on one of its proprietary vaccine candidates being designed to prevent infection from the SARS-CoV-2 virus)
  • DOYU +11.5% (reported earnings, also - received a preliminary non-binding proposal letter, dated August 10, 2020, from Tencent Holdings Limited, proposing that DouYu and HUYA Inc. (HUYA) enter into a stock-for-stock merger)
  • MNK +7.6% (announces U.S. FDA filing acceptance of Biologics License Application for StrataGraft regenerative skin tissue for treatment of adults with deep partial-thickness thermal burns)
  • HUYA +7.3% (received a preliminary non-binding proposal letter, dated August 10, 2020, from Tencent Holdings Limited, proposing that DouYu and HUYA Inc. (HUYA) enter into a stock-for-stock merger)
  • SNCR +6.2% (secured a renewal to its agreement to provide Verizon with its White-Label Personal Cloud Platform)
  • SPG +6.1% (Simon Property Group (SPG) is in discussions with Amazon (AMZN) to turn some of its anchor store space into fulfillment centers)
  • PSTI +5.9% (Paul Ehrlich Institutehas cleared the Company's Phase II clinical protocol for its study to Evaluate the Efficacy and Safety of Intramuscular Injections of PLX PAD for the Treatment of severe COVID-19)
  • NK +5.4% (NantKwest and CBR by Generate Life Sciences announce collaboration to develop a COVID-19 treatment leveraging newborn stem cells
  • TWTR +3.3% (Twitter (TWTR) and TikTok held preliminary discussions about a potential merger )
  • AQST +3.3% (FDA has granted Fast Track designation for the Company's drug candidate AQST-108 for the treatment of allergic reactions (Type 1), including anaphylaxis)
  • AXSM +3.1% (announces continued progress toward NDA filing of AXS-05 in the treatment of major depressive disorder)
  • AAPL +1.2% (positive article in Barrons)

Analyst comments:

  • AVNT +7.8% (upgraded to Buy from Hold at The Benchmark Company)
  • FVRR +3.5% (upgraded to Buy from Neutral at Citigroup)
  • FDX +1.9% (upgraded to Outperform from Mkt Perform at Bernstein)
  • KRMD +1.6% (initiated with a Buy at H.C. Wainwright; tgt $16)
  • CUBE +1% (upgraded to Outperform from In-line at Evercore ISI)

>>> US Early premarket gappers

Early premarket gappers

  • Gapping up:
    • MCRB +173.3%, TRVN +68.9%, MJCO +22.2%, FL +17.3%, SNCR +16%, DOYU +9.3%, SDGR +6.7%, SPG +6%, WSC +4.4%, FSLY +3%, TWTR +2.9%, ON +2.4%, GOLD +1.6%, AJRD +1.1%, AAPL +1%, BRK.B +0.9%
  • Gapping down:
    • SEAS -5.4%, RETA -4.9%, CYCN -2.5%, RDN -2%, HCM -1.1%, VXX -0.5%, GILD -0.5%