Uber softens on disappointing 2Q20 numbers; Summit Midstream moves up after beating estimates – Mid-Day Commentary

The US economy added 1.8m in nonfarm payrolls in July, according to the Bureau of Labor Statistics release this morning, representing a slowdown in the pace of hiring and potentially posing ominous signs for an economic rebound.

The Dow Jones Industrial Average was softer this morning at 27,361, down .09% from yesterday’s close, signaling a shift in sentiment to worried from cautiously optimistic, according to a sellside macroeconomist. 

“There are no rose-colored glasses with this report,” the economist added.

Gains in July were less than the 4.8m added in June and 2.7m added in May. A few line items evinced future weakness for economic growth moving into the seasonal hiring period in September and October. More alarming were the manufacturing and construction sectors, where employment increased by 26,000 and 20,000, respectively. That means two things: manufacturers don’t have the manpower to rebuild inventory and the private sector doesn’t see any expansion of its business footprint, the economist said.

“[Federal Reserve Chairman] Jerome Powell is prepared to do anything to preserve the economic rebound,” said the economist. “There is not the same kind of commitment from Congress.”

Meanwhile, Uber’s bonds traded down today after the ride sharing company reported disappointing results for the quarter ended 30 June. 

Uber posted an earnings per share loss of USD 1.02, compared to an expected USD 86 cents per share. The company raked in USD 2.24bn of revenue, beating estimates on that front because of the UberEats business. 

Throughout the quarter, the company’s rideshare segment suffered due to the pandemic, whereas the UberEats business grew during this time. 

On a segment basis, gross bookings for rideshares totaled USD 3.05bn, compared to an expected USD 3.47bn. Despite being up 113%, UberEats generated a gross USD 6.96bn in bookings, lower than consensus estimates of USD 6.57bn. 

The USD 500m 7.5% senior unsecured notes due 2023 traded down today to 104.125 to yield 5.463% from trades at 106.34 to yield 6.265% yesterday, according to MarketAxess. 

Common shares traded at USD 32.97 per share today and a market cap of USD 57.542bn, down 5% compared to yesterday’s close. 

Summit Midstream Partners’ debt and equity traded up this morning after the issuer reported its 2Q20 earnings that beat estimates and reaffirmed its adjusted EBITDA guidance for the year.

The energy company booked USD 1.06 in earnings per share for the quarter, significantly beating street analyst estimates of USD 30 cents per share. Though the borrower reported a 4.4% decline in adjusted EBITDA for 2Q20 to USD 64.6m compared to USD 67.6m in 2Q19, it reaffirmed its full year guidance of USD 250m-USD 260m in adjusted EBITDA. 

Summit’s USD 437.5m 5.75% senior unsecured notes due 2025 ticked up a point this morning to change hands at 50.25 yielding 24.005% from 49.25 yesterday. Meanwhile, Summit’s common shares went up 1.62% from yesterday’s close to trade at 94 cents with a USD 88.8m market cap.

DSLD Homes’ newly issued USD 225m 7.5% senior unsecured notes due 2031 ticked up to 100.6 yielding 7.336% this morning after pricing at par yesterday. Proceeds from the financing will be used to pay down debt and fund general corporate purposes.  

MGIC Investment’s new USD 650m 5.25% senior unsecured notes due 2028 broke for trading this morning, up two points to 102 to yield 4.7%. The bonds were the most heavily traded high yield issue this morning at more than USD 130m in volume.

The company issued the bonds yesterday via Goldman Sachs with pricing coming in from talk of 5.5%. Proceeds from the unsecured note offering will fund a tender of the company’s USD 425m 5.75% senior notes due 2023.

2020 Debtwire

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