20大交易20大问题以及的并购与发行预期

1、20 for 2020 trades, 20 questions, and our M&A and issuance expectations in 2020 for US and European IG TMTGlobal Credit Research13 January 2020Today we publish our 2020 Investment Grade TMT Outlook, featuring views from Brian Turner in New York (USDs) and Christian Crosby in London (EURs and GBPs).

2、We focus todays report around the top 20 questions facing TMT this year, also providing our top trade ideas and M&A and issuance expectations. We hope you find it useful, please feel free to reach out to any of us with further questions.Company and subsector views. In the US, we maintain our Overwei

3、ght recommendations on TelCos (Domestic & Yankee) and Cable & Satellite (with a bias toward cable). We are Neutral on Diversified Media, and remain Underweight in Technology as valuation appears unattractive in our view amidst increased macro tensions, regulatory risk in an election year, and top- l

4、ine pressure / slowing IT spending growth. In Europe, we have a mixed view on the Telecoms space with adverse fundamentals offset by the stated de- leveraging modes of a few large issuers and beneficial technical factors. We maintain our structural Underweight on Media given secular trends, and are

5、Overweight on a Tech space featuring (largely) improving BBBs trading wide and balanced against compressed spreads in high-quality credits (page HYPERLINK l _bookmark0 2).20 trades for 2020. We assembled 20 of our top trade ideas across USD, EUR, and GBP securities from the long and short side for t

6、his year. We highlight our ideas with a quick rationale and entry levels, providing spread valuation charts and pointing to issuer-specific discussions later in the note as support (page HYPERLINK l _bookmark1 5).20 questions for 2020. Todays piece focuses on a few of the biggest questions weve rece

7、ived from investors and others weve asked ourselves. Here we offer 20 questions that we expect to be the most relevant for the space this year, along with summaries of our views on each and any trading views to follow (page HYPERLINK l _bookmark2 10).M&A. We expect moderate levels of US M&A in 2020,

8、 mostly in the Tech (XRX/HPQ) and Telecom (S/TMUS) sectors with potential for consolidation in Media & Entertainment. In Europe we see limited scope for large consolidative TelCo deals, be they in-market or cross-border, but acknowledge Spain as one possible market for tie-ups to be explored. We wil

9、l be watching out for what Liberty Global may look to do with its large cash balance, and expect continued dealmaking in Technology or in Media as issuers try to restart growth (page HYPERLINK l _bookmark10 21).Issuance. We expect new supply of $140bn for USD TMT. Aside from normal way refinancing,

10、our expectations are driven by M&A funding in the Tech and Telecom sectors and a return to the capital markets for cash rich issuers such as Apple and Cisco, among others. In EUR/GBPs we expect a 20% y/y decline in supply to 60bn aggregate. We expect TelCo supply to revert to historical norms after

11、advantageously pre-funding upcoming needs in 2019, seeing a few stated de-leveraging issuers partially offset by needs for spectrum auctions or further green bond issues. We expect continued Reverse Yankee issuance as well in existing and inaugural issuers, highlighting a few in our write-up (page H

12、YPERLINK l _bookmark11 22).Investment Grade TMT Christian Crosby, CFA AC (44-20) 7134 2850 HYPERLINK mailto:christian.d.crosby christian.d.crosbyJ.P. Morgan Securities plcBrian Turner AC(1-212) 834-4035 HYPERLINK mailto:brian.m.turner brian.m.turnerJ.P. Morgan Securities LLCDean L Ash(1-212) 834-264

13、1 HYPERLINK mailto:dean.l.ash dean.l.ashJ.P. Morgan Securities LLCSee page 29 for analyst certification and important disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of inte

14、rest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. HYPERLINK / Investment Grade TMT coverage summaryTickerNameTelecoms Sector$ RatingOW UW N N NC N/ RatingN N NC OW N UWTickerNameTechnology SectorA

15、MXLMM AMTT ENFP BRITELCKHGTH CCIDT EQIX ILDFP KPN ORAFPPROXBB SCMNVX ODGR TELEFO TKAAV TELNO TELIAS TLSAU VZVODAmerica Movil American Tower AT&T Inc Bouygues SA BT Group PLCCK Hutchison Telecom Crown Castle Deutsche Telekom AG EquinixIliad SAKoninklijke KPN NV Orange SA Proximus SA Swisscom AGTelefo

16、nica Deutschland AG Telefonica SATelekom Austria AG Telenor ASATelia Co AB Telstra Corp LtdVerizon Communications Inc. Vodafone Group PLCNCN NNN UW NN OWN UW OW OW$ Rating / RatingUWOWARWArrow Electronics IncNNCASMLASML Holding NVNCOWAVTAvnet IncNNCCAPFPCapgemini SENCNRCSCOCiscoNNCGLWCorningNNCEFXEq

17、uifaxOW NC FISFidelity National Info Services NOW FISVFiserv IncNOWHPQHP IncNNCIFXGR Infineon Technologies AGNCNR IBMIntl Business Machines Corp UWUW KLAC KLA-TencorOW NC MSIMotorola Solutions IncNNCMUMicron Technology IncNNC NXPINXP Semiconductors NV OW NC ORCL OracleNNCSAPGR SAP SENCNSTXSeagate Te

18、chnologyNNCSAPGR SAP SENCNSTXSeagate TechnologyNNCVRSKVerisk AnalyticsOWNCEuropean Media SectorBERTELBertelsmann SE & Co DMGTLN Daily Mail General & Trust ETLFPEutelsat Communications ITVLNITV PLCDECFPJCDecaux SAPSONPearson PLCPSMGRProSiebenSat.1 Media SE PUBFPPublicis Groupe SA RELLNRELX PLCSESGFP

19、SES SA SKYLNSky PLCVIVFPVivendi SA WKLNAWolters Kluwer NV WPPLNWPP Group PLCNC NC NC NC NC NC NC NC NC NC NC NC NC NC NCUW N UW UW UW UW N UW UW N UW OW UW UW NUS Diversified Media SectorFOXA DISCA IPG TW X VIAC21st Century Fox Discovery Communications Interpublic GroupTime Warner, Inc ViacomCBSN NR

20、 N OW NR NNR NC N NC NC NCUS Cable SectorCMCSA COX TW CComcast Corporation Cox Communications Time Warner CableOW OW N OW NC OW NC NCUWNC NC NC NCUWNC NC NCNUWOW NC NR NC NNC N NR N NCTable 1: Investment Grade TMT coverage and ratings summary - USD & EUR / GBPSource: J.P. Morgan. Brian has primary i

21、ssuer coverage of all US-domiciled issuers (and their $ securities) while Christian has primary issuer coverage on European-domiciled issuers (and their / securities). Note that America Movil (AMXLM) $ notes are primarily covered by the JPM LatAm credit team in New York.For our full coverage comment

22、s on an issuer-by-issuer basis for our 66 combined names, we point you to the latest US HG (here) and European (here) Coverage and Ratings reports, published November 21st and October 24th, respectively.USD subsector views Brian TurnerDomestic Telecoms (Overweight): We maintain our Overweight recomm

23、endation on the Domestic Telecom sector. While the strategies of the large incumbent wireless operators has diverged over the years, with AT&T focused on its entertainment business and integrating Time Warner and Verizon focused on the network (5G), both have made de-leveraging a top priority, suppo

24、rting spreads. AT&T began 2019 as one of the most indebted U.S corporates of all time, but it has steadily driven down leverage and remains on track to reach its 2.5x net leverage target by year-end. The firm recently released its guidance and capital allocation plans for the next three years, which

25、 for 2020 implies revenue growth of 1-2%, stable adj. EBITDA margins, FCF in the $28bn range, and $5-10bn of further asset monetization. It will be repurchasing roughly 3% of its outstanding shares/year (expected to be front loaded in light of a $4bn ASR). We believe AT&Ts outlook and capital alloca

26、tion plan is on balance positive for credit and should be supportive of spreads in 2020. Further, webelieve that a S/TMUS deal may pave the way for a potential transaction for AT&Ts satellite TV business, enabling (among other things) incremental balance sheet enhancement / flexibility. Verizon mean

27、while has yet to give 2020 guidance, but we believe leverage levels are approaching those commensurate with single-A ratings, though the timetable on a C-Band auction may affect the timing of an upgrade given its likely involvement. On the Cell Tower side, we expect AMT and CCI to perform well drive

28、n by strong demand for network infrastructure and 5G. We also believe the S/TMUS deal may now be an opportunity for the tower operators with Dish emerging as the fourth major wireless player.Yankee Telecoms (Overweight): We maintain our Overweight recommendation on Yankee Telecoms. Spreads enjoyed a

29、 strong performance in 2019 with spreads compressing nicely versus the JULI ex-EM index by year-end (nearly halving the 40bps differential from YE18). We believe the inherently defensive nature of the sector, coupled with significant balance sheet enhancement initiatives (dividend cuts, asset sales)

30、, has supported outperformance. We expect continued de-leveraging at Vodafone and Telefonica along with operational strength at Orange and Deutsche Telekom in 2020. We meanwhile believe BT will continue to trade wide with fair value at 20-30bps behind peers. Given these, we expect Yankees to outperf

31、orm again in 2020, though we take a more measured approach given the 2019 run.Diversified Media (Neutral): We maintain our Neutral recommendation on the Diversified Media sector. Despite the continued secular decline of video subscribers and generally negative sentiment toward traditional media comp

32、anies, the sector outperformed the JULI ex-EM in 2019. This solid performance can be attributed to a concerted effort by companies to clean up their balance sheets (CBS, DISCA, VIA) amidst the more challenging operating environment and limited debt-financed M&A. This year, we expect several themes t

33、o develop. First, we will be looking for the initial winners and losers of the streaming wars, with the recent launch of Apple TV+ and Disney+, in addition to HBO Max and Comcasts Peacock in 2020. Another key theme is the increase in content investments, with both Discovery and ViacomCBS providing g

34、uidance for considerably higher spending, which will of course place downward pressure on free cash flow. In terms of M&A, we expect the theme of consolidation to continue and look for Discovery, Fox, and ViacomCBS among others to be interested in deal making.Cable (Overweight): We maintain our Over

35、weight recommendation on Cable and Satellite. Spreads have performed in line with the broader JULI ex-EM, reflecting strength in connectivity and balance sheet cleanup at Comcast, offset by weakness in the video and telephony businesses. Operationally, trends in the core cable business remained larg

36、ely unchanged again in 2019 as the rapid growth of data usage and attractive economics of cable broadband have driven solid top/bottom-line growth. The video and telephone business remains pressured, with both Comcast and Charter focusing on retaining profitable customers. This year, we maintain a f

37、avorable view, expecting strong sector performance owing to its inherently defensive profile, continued growth prospects from broadband offerings, and low/moderate M&A activity coupled with balance sheet cleanup at Comcast. That said, we believe both Comcast and Charter remain interested in purchasi

38、ng cable assets, though we note high-quality, sizable assets appear few and far between. We think Comcast could be interested in acquiring additional media/content assets, domestic and international, while Charter appears focused on the traditional cable business rather than on media/entertainment.T

39、echnology (Underweight): We maintain our Underweight view on the Tech space. Amid a volatile and uncertain macroeconomic backdrop, it underperformed the broader JULI ex-EM in 2019. Companies across the spectrum ranging from cloud providers to hardware, networking, and semiconductors provided muted g

40、uidance to conclude 2019, largely attributable to the trade dispute between the U.S. and China and slowing IT spending growth. This year we have also seen the continued struggle for large, high-quality legacy technology firms (CSCO, IBM, ORCL) to drive consistent organic growth in this more challeng

41、ing operating environment. Heading into 2020, we believe there is limited upside for the sector barring a significant resolution to the U.S./China trade dispute and a reacceleration of IT spending. We see these overhangs, in addition to the continued threat of increased regulatory oversight and prob

42、es from the Justice Department, as driving factors behind the sectors continued underperformance in 2020 and our Underweight. We expect moderate levels of M&A driven by the larger, legacy companies flexing their balance sheets to acquire growth/scale, offset by an uncertain regulatory environment du

43、ring an election cycle likely causing some to stay on the sidelines. A potential HPQ/XRX deal is currently the only outstanding M&A funding we have accounted for in 2020.EUR and GBP subsector views Christian CrosbyTelecoms (Neutral): There isnt a lot to love in Telecoms fundamentally thanks to a com

44、bination of intensely competitive markets and elevated capital needs for fiber and 5G spectrum. We do not yet expect an inflection in pricing and subscriber trends in key markets like Italy, Spain, and the UK, although we acknowledge health in France and Germany. We see little scope for regulators t

45、o allow consolidation-led market repair, with most issuers engaging in network sharing to extract partial benefits instead. We meanwhile expect the recent “tower trend” to continue as operators re-evaluate their asset bases, but see true de-leveraging benefits limited to the few operators with portf

46、olios large enough to see substantial cash inflows. That being said, we cant ignore the technical tailwinds afforded the sector at present.Ongoing CSPP buying should support spreads in the large incumbents (ORAFP, DT, TELEFO) which make up nearly 40% of the IG TelCo index alone, and we see this leav

47、ing spreads enticing in large non-eligible structures aspiring to improve credit (VOD, T, VZ). We lastly expect supply to fall after pre-funding activity of late and a more manageable 2020 maturity schedule. All of these factors combined thus drive a positive technical view to balance our fundamenta

48、l concerns.Media (Underweight): we remain structurally Underweight on European Media as we see slow growth trends and secular business pressures prompting issuers to re- start growth inorganically via M&A. We thus expect a broader re-leveraging trend in a space which has been for the last few years

49、under-levered, highlighting names like VIVFP, WKLNA, DECFP, PSMGR, and even ITV as interested acquirers.Technology (Overweight): we remain Overweight despite tight levels. IBoxx Tech is balanced between large Reverse Yankees and a few European players, further bifurcated by a mix of either very high

50、-quality issuers and those in de-leveraging modes. In conjunction with our general view of favoring credits with stated plans for balance sheet improvement, we believe some of the wider trading names in the space present opportunities. That said, we note macro concerns that could weigh on spreads, m

51、ost importantly the US election and US-China trade tensions.20 trades for 2020As “short-term” trades, these ideas can be considered closed when the underlying fundamental rating on the issuer or issue changes, or at the end of three months. Levels priced as of EOD on 9 January 2020.USD trade ideasBu

52、y Comcast (CMCSA) $ 2.650% 30s T+78bps, Sell Verizon (VZ) 3.875% 29s T+75bps. While we remain constructive on Verizon and believe the company will perform well in 2020, we favor the Comcast fundamental profile with a more diversified portfolio of assets and larger FCF base. Both companies will be fo

53、cused on de-leveraging in 2020, with Verizon focused on achieving 2.0 x net unsecured leverage and Comcast meeting rating agency targets. However, we believe most of the single-A upside has been largely priced into Verizon secondary spreads and thus believe the risk reward is better skewed towards C

54、omcasts de-leveraging story.Buy Micron (MU) $ 4.663% 30s T+165bps. Micron reported solid F1Q20 results and guidance with positive DRAM/NAND commentary. Furthermore, the company recently presented at the J.P. Morgan Tech Forum at CES and reiterated their view on improvement in industry supply/demand

55、fundamentals in 2020. The company also discussed their strategy focused on technological leadership and higher value products and solutions over simply being a supplier of memory components. While spreads have rallied meaningfully, we expect the positive momentum to continue with key growth catalyst

56、s in mobile, improvement in industrial and automotive fundamentals, and a potential resolution to the U.S./China trade dispute.Buy NXP Semiconductors (NXPI) $ 4.300% 29s T+147bps. We continue to recommend investors stay long NXPI despite a strong rally in spreads following positive commentary and da

57、ta for the semiconductor market. In our view, NXPI remains one of the best positioned semiconductor firms, benefitting from the high value and growth areas of the automotive (ADAS, Networking, Electrification) and industrial/IoT market coupled with a strong balance sheet and FCF profile. Furthermore

58、, semi peer Microchip delivered positive commentary at a recent industry conference highlighting improving industry fundamentals in the automotive and industrial end markets.Buy Fidelity National Information Services (FIS) $ 4.500% 46s T+133bps. We initiated on FIS credit today with a Neutral rating

59、 largely due to valuation, despite what we believe is an attractive de-leveraging story in a defensive business. While leverage at FIS is initially high at 4.0 x as of 3Q19, we expect the company to generate significant FCF with a forecasted $2bn to pay down debt in 2020. We highlight FISs industry

60、leading position in the payment processing space, strong and predictable free cash flow generation, and highly diversified portfolio of business offerings and clients among large, mid-sized, and small financial institutions. While we believe FIS trading levels are trading close to fair value in the