Auto suppliers sell off on Mexico tariff news; E&Ps move down in tandem with oil prices – Mid-Day Commentary

Auto suppliers sold off today in reaction to President Donald Trump’s announcement late yesterday that the US will impose a 5% tariff on goods imported from Mexico starting 10 June, according to two buyside sources.

The suppliers carry great exposure to the major automakers, which themselves face a negative financial impact as they import parts and vehicles from Mexico, the sources said.

Fiat Chrysler imports roughly 24% of the total parts for its cars and trucks from Mexico, according to SEC filings. The company’s equity responded negatively to the news, trading today at USD 12.74 per share for a market cap of USD 21.556bn, down 4.93% from yesterday’s close.

American Axle’s USD 496m 6.5% senior unsecured notes due 2027 traded today at 94.875 to yield 7.371% from trades at 96.25 to yield 7.131% yesterday, according to MarketAxess. The company’s stock traded today at USD 10.25 per share for a market cap of USD 1.153bn, down 3.85% from yesterday’s close.

Goodyear’s USD 900m 5% senior unsecured notes due 2026 traded today at 91.625 to yield 6.51%, down from 93.25 to yield 6.204% yesterday, according to MarketAxess. The company’s stock traded today at USD 13.51 per share for a market cap of USD 3.142bn, down 3.02% from yesterday’s close.

Bellwether E&P bonds shed several points this morning on the heels of continued depletion in oil prices and market de-risking, according to two buysiders.

“Oil is still leaking and investors are now focused on de-risking in this market, which means energy’s usually the first one to go,” said one of the buysiders.

WTI was quoted today at USD 55.10 per barrel, down 2.63% from USD 56.59 yesterday (30 May) and 6.8% from USD 59.14 on Tuesday (28 May).

Chesapeake Energy’s USD 850m 7% senior unsecured notes due 2024 fell three points today to 90.5 to yield 9.298% from trades yesterday at 93.5 to yield 8.54%, according to MarketAxess. The company’s stock traded today at USD 1.96 per share for a market cap of USD 3.159bn, down 3.44% from yesterday’s close.

California Resources’ USD 2.1bn 8% second lien notes due 2022 shed more than two points today to 70.25 yielding 20.179% from trades at 72.5 to yield 19.04% yesterday, according to MarketAxess. The company’s stock traded today at USD 16.49 per share and a market cap of USD 805m, down 2.23% from yesterday’s close.

Whiting Petroleum’s USD 1bn 6.625% senior unsecured notes due 2026 dipped to 91.5 to yield 8.32% from trades at 92.5 to yield 8.11% yesterday, according to MarketAxess. The company’s stock traded today at USD 18.65 per share and a USD 1.7bn market cap, down 1.24% from yesterday’s close.

Drilling services provider KCA Deutag’s USD 375m 7.25% senior secured notes due 2021 traded today at 76.5 to yield 22.857%, down from trades in the 79-81 range on 28 May, according to MarketAxess.

2019 Debtwire

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