Musk and match

A Trump victory could also increase the likelihood of billionaire and Republican mega-donor Elon Musk getting involved with government affairs. Musk has donated roughly $75m to the Trump campaign through a political action committee called America PAC.

“He’s said he’s going to bring in Musk and I imagine he might treat the bureaucracy like what he did with X and get rid of a ton of staff,” said a buysider.

The longer-term consequences of the election, however, remain unpredictable particularly given the events leading up to (and beyond) the previous election day.

“Frankly I’m exhausted by all of this. But that’s the problem — it’s not going to be over in a few days. Maybe not even until January 20th,” said a credit analyst referring to the date of the next president’s inauguration.

In light of this monumental event, we looked at several big ticket M&A deals in addition to sectors that could be impacted by the election. We’ve also made use of the 9fin document tracker tool to identify leveraged credits which indicated in company filings that they could be affected by the upcoming election. Here are some examples:

CVR Energy

CVR Energy, which refines petroleum and renewable fuels, indicated in a 29 October company filing that the presidential election could create uncertainty which could “materially impact [its] business, operations…and market stability.”

Sources have indicated that the energy industry is most likely to be impacted by the elections, with Republicans potentially pushing for a rollback of green initiatives in favor of traditional energy sources.

As an energy refiner, the company is also highly sensitive to market cyclicality — it was recently downgraded by Moody’s in September from Ba3 to B1 due to volatility in oil and gas pricing. Click here for more details on its operational challenges and Q3 earnings.

CVR’s senior notes due 2029 traded up by almost one point to 97.12 on 5 November. Its senior notes due 2028 also traded up the same amount to 92.35.

MaxLinear

The semiconductor industry also stands to be significantly impacted by the election. Chip maker MaxLinear said in a 23 October company filing that a change in administration resulting from the election could make further changes in US trade policy that would “negatively affect [its] business.”

The company has no tradable debt, but its $100m revolving credit facility remains undrawn as of 30 September.

Nippon Steel-US Steel acquisition

Japanese steel producer Nippon Steel’s proposed acquisition of American peer US Steel has fielded strong opposition from both Democrats and Republicans alike (for more details, check out this article). More recently, VP Harris mentioned during a campaign stop in Pittsburgh that US Steel should “remain American-owned and American-operated.”

Regulatory officials reviewing the transaction have since pushed back the deadline for approval of the deal to after the election, but bipartisan opposition of the proposed deal means that another (domestic) rival could have a shot at acquiring it.

This brings us to Cleveland-Cliffs, whose CEO Lourenco Goncalves has been vocal about wanting to acquire US Steel for a while.

On a 5 November earnings call, Goncalves did not explicitly mention either company, but indicated the domestic steel industry would thrive regardless of who becomes the president.

“At this point, it's clear to us that with either Donald Trump or Kamala Harris as President of the United States, our executive branch will work to improve conditions and support a domestic steel industry owned and operated by American producers,” Goncalves said.

US Steel’s senior notes due 2029 were quoted at 100.4 on 5 November, slightly down from the day prior. Cleveland-Cliffs’ senior notes due 2029-2032 were roughly flat while its senior notes due 2033 was down by nearly one point to 100.27.

Spirit and Frontier’s potential merger

We’ve reported on Spirit Airlines’ struggles especially after its proposed merger with JetBlue collapsed earlier this year.

Published reports now suggest that Spirit has revived merger talks with Frontier Airlines, which previously offered to acquire Spirit two years ago. The merger would likely happen as part of Spirit’s restructuring, according to the report.

But even if a merger agreement is signed by the two companies, it remains to be seen if it would get done.

“Trump has protectionist tendencies, but I don’t think he wants to hand out any special favors within the airline industry,” said the first buysider.

Spirit’s senior secured notes due 2025 were relatively unchanged from the day prior in the 62-range.

Private prisons

The private prison sector was forced into the spotlight in the months leading up to the last election. And now companies like CoreCivic and GEO Group are back in the spotlight as investors keep tabs on immigration and border policies outlined by both parties.

“Obviously it will benefit the private prisons if Trump wins,” said the credit analyst. “I wouldn’t be surprised if he pushed for some of the shut-down facilities to be reopened.”

9fin previously reported that CoreCivic’s debt traded down earlier in June when the South Texas Family Residential Center in Dilley, Texas was shut down by the Biden administration. This meant that the company’s government service contract for the facility — which comprised roughly 8% its Q1 revenue — would also be terminated.

The facility is the largest immigrant detention center in the US, and was opened during the Obama administration to accommodate families arriving at the border.

CoreCivic’s senior notes due 2029 were quoted at 105.19 on 5 November, roughly one point up from the day before. Its senior notes due 2027 were relatively unchanged in the 95-area.

GEO Group’s senior secured notes due 2029 were relatively unchanged at 104.16, while its senior notes due 2031 rose by half a point to 106.44 on 5 November.

Spokespeople for MaxLinear and CVR Energy did not return a request for comment. Representatives for the rest of the companies were not immediately available for comment.

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