Covid-19 case surge shakes market; Gilead bounces on positive test data; Netflix hits record highs along with tech sector — Mid-Day Commentary

The market was unsteady this morning as Thursday marked another day of coronavirus case increases in the US, offset by new positive antiviral test data from Gilead. At the same time, investors sifted through the producer price index published by the Labor Department, which fell short of expectations for June.  

The US reported a daily record of 63,247 new cases of Covid-19 on Thursday, while California, Florida and Texas each posted record one-day new deaths from the virus. 

On the positive side, Gilead announced that its remdesivir treatment reduced the risk of death by 62% compared with standard care. 

The company’s stock is trading at USD 76.6, up 2.5% from previous close, with a market cap of USD 96.1bn. 

Meanwhile, the Labor Department disclosed that the producer price index for final demand dropped 0.2% last month, after rising 0.4% in May. Market expectations were that the PPI would climb 0.4% in June.

The tech space has seen several days of gains this week as investors pile into issuers deemed coronavirus-proof or positively impacted by stay-at-home orders, pushing the Nasdaq Composite to record levels. 

The Nasdaq Composite hit a record of 10,556.482 on Thursday before settling slightly this afternoon to 10,535.43, down 0.12% from yesterday’s close.

As a giant in the tech space as of late, Netflix’s bonds and equity have trended upward in line with the index.

Netflix’s USD 500m 3.625% senior unsecured notes due 2025 have gained a point over the last week to last trade today at 102.625 to yield 3.017% from trades at 101.5 last week, according to MarketAxess. 

The company’s equity is heading toward another day of a record high at USD 541.80 per share and a USD 238.259bn market cap, up 6.70% from yesterday’s close. 

Market bellwethers Occidental PetroleumQEP Resources and Ford Motor Co ticked down this morning in line with the overall market. 

Occidental’s USD 750m 4.625% senior unsecured notes due 2045 traded today at 72.125 to yield 7.005% from trades at 73.25 to yield 6.884% yesterday (9 July), according to MarketAxess. 

QEP’s USD 500m 5.625% senior unsecured notes due 2026 traded today at 57.75 to yield 17.806%, down two points from trades at 59.75 to yield 16.982% on 7 July, according to MarketAxess. 

Ford’s USD 3.5bn 9% senior unsecured notes due 2025 fell more than a point to 107.875 to yield 6.998% today from trades at 109.184 to yield 6.685% yesterday (9 July), according to MarketAxess. The notes have slightly bounced back to trade at 108.375 to yield 6.877%.  

Carnival’s stock popped this morning after the cruise line provided a business update where they noted a continued demand in new bookings for 2021. 

Management also reiterated plans to resume guest cruise operations for AIDA from its ports in Germany starting next month. AIDA will be the first of Carnival’s nine cruise brands to resume guest cruise operations. 

The company also said on its earnings call that it can have cash flow break even at a capacity between 30% and 50%. 

The company’s stock rose 9.4% on the day to USD 15.90 per share for a market cap of USD 12.49bn.

The USD 4bn 11.5% senior secured notes due 2023, issued in April, traded today at 108.75 to yield 7.542%, in line with recent levels, according to MarketAxess. 

In the new issue space, Diebold Nixdorf’s newly priced USD 700m 9.375% senior secured notes due 2025 changed hands at 101.375 this morning for an 8.958% yield, down slightly from 102.5 context yesterday but up from the 99.031 issue price. Proceeds from the financing will be used to pay down debt.  

Meanwhile, the US-based electronic systems provider’s existing USD 400m 8.5% notes due 2024 traded down to 86 for a 13.352% yield from 87.75 yesterday. Its stock is up 5% this morning to USD 5.67, from previous close, with a market cap of USD 440.2m.

Choice Hotels International’s new USD 450m 3.7% unsecured notes due 2031 traded up to 101.695 this morning yielding 3.539% after pricing at 99.494 yesterday, according to MarketAxess.

The issuer plans to use the proceeds of the financing to repay its USD 250m unsecured term loan and fund the purchase price of its recently tendered 5.750% senior notes due 2022.

2020 Debtwire

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