Markets rallied sharply on Monday after a disappointing last week. S&P and Nasdaq reversed Friday’s losses and were up 1.4% and 0.8% respectively. Energy was up 4.3%, followed by Financials and Industrials that rose more than 2%. The yield curve steepened with the US 10Y Treasury yields rising 8bp to 1.49%, rebounding from a 3M low of 1.35%. European markets were also upbeat and the FTSE and DAX closed 0.6% and 1% higher. US IG and HY CDS spreads tightened 1.4bp and 6.5bp respectively. EU main and crossover CDS tightened 0.5bp and 2.4bp respectively. Saudi TASI was up 0.6% while Abu Dhabi’s ADX was down 0.5%. Brazil’s Bovespa closed 0.7% up. Asian markets were broadly positive – Nikkei and Singapore’s STI were up 2% and 0.3% respectively while Shanghai and HSI were largely flat. Asia ex-Japan CDS spreads were 0.9bp wider. It’s a busy day at the Asian primary markets with seven new deals including CapitaLand, BOCOM, CCB and GLP.
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New Bond Issues
- CapitaLand China Trust S$ 7Y at 2.5% area
- BOCOM International Holdings $ 5Y at T+130bp area
- CCB (Europe) EUR June 2024 senior bond at MS+70bp area
- GLP $ green PerpNC6 at 4.9% area
- RHB Bank $ 5Y at T+115 area
- Kexim $ 3Y/5.5y/20Y bonds at T+45bp/T+60bp/T+85bp area
- Hangzhou Fuyang City Construction Investment $ 5Y IPG 3.65% area
JPMorgan raised $2.5bn via a dual-trancher. It raised $2bn via a 4Y non-call 3Y (4NC3) bond at a yield of 0.969%, 15bp inside initial guidance of T+65bp area. It also raised $500mn via a 4NC3 floater at a yield of 0.63%, or SOFR+58bp as compared to initial guidance of SOFR equivalent. Proceeds will be used for general corporate purposes.
Scotiabank raised $2.15bn via a three-rancher. It raised:
- $750mn via a 2Y non-call 1Y (2NC1) floater at a yield of 0.33%, or SOFR+28bp, 12bp inside initial guidance of SOFR+40bp area
- $750mn via a 5Y bond at a yield of 1.366%, 17bp inside initial guidance of T+65bp area
- $650mn via a 10Y bond at a yield of 2.164%, 17bp inside initial guidance of T+85bp area
The bonds have expected ratings of A2/A-. Proceeds will be used for general corporate purposes.
Hopson Development raised $200mn via a 2.5Y bond at a yield of 6.8%, 30bp inside initial guidance of 7.1% area. The bonds are rated B+ and received orders over $630mn, 3.2x issue size. The offer has a 25-cent rebate for private bank orders. Proceeds will be used to refinance existing debt.
New Bond Pipeline
- China Oil and Gas Group hires for $ bond issue
Beijing Construction Engineering Group hires for $ bond; calls tomorrow
- Mongolia hires for $ senior bond; calls starting today
- Fitch Upgrades Digicel Subsidiaries to ‘B-‘/Stable; Affirms Parent Company at ‘CCC’
- Fitch Revises Groupama’s Outlook to Positive; Affirms at IFS ‘A’
- CVS Health Corp. Outlook Revised To Positive By S&P On Deleveraging And Operating Execution; Issuer Credit Rating Affirmed
- Fitch Revises Credit Europe Bank’s Outlook to Stable, Affirms IDR at ‘BB-‘
- Ireland-Based Consumer Foods Group Valeo Rated ‘B’ By S&P; Outlook Negative
- Beijing Construction Engineering Group Assigned ‘BBB’ Rating By S&P, Outlook Stable; Guaranteed Notes Rated ‘BBB’
- Moody’s affirms BT’s Baa2 rating with a negative outlook
Term of the Day
Exchange Traded Funds (ETFs)
Exchange Traded Funds (ETFs) are investment products that track a particular sector, asset class or index but can be traded on the exchange. While mutual funds may also track these assets, since ETFs are traded on an exchange, investors are aware of prices on a real-time basis, can buy or sell their ETFs with minimal delay and have less limitations on minimum investments. This makes it a friendlier option to retail investors with expense ratios also generally lower than that of mutual funds. FT notes that net flows into inflation-linked ETFs have risen to a record as investors try to protect against rising inflation risks.
James Bullard, St. Louis Fed President