This site uses cookies to provide you with a great user experience. By using BondbloX, you accept our use of cookies.
US equity markets ended mixed with the S&P down 0.1% and the Nasdaq flat after initial losses of 2% and 2.7% respectively. Healthcare led the gainers, up 1% while Industrials led the losers, down 1.2%. US 10Y Treasury yields were down 1bp to 1.76%. European markets were lower with the DAX, CAC and FTSE down 1.1%, 1.4% and 0.5% respectively. Brazil’s Bovespa was down 0.8%. In the Middle East, UAE’s ADX was down 1% while Saudi TASI was up 0.9%. Asian markets have opened mixed – Shanghai and Nikkei were down 0.1% and 0.9% while HSI and STI were up 0.1% and 0.3%. US IG CDS spreads were 0.1bp tighter and HY CDS spreads widened 4.6bp. EU Main CDS spreads were 0.6bp wider and Crossover CDS spreads were 1.3bp wider. Asia ex-Japan CDS spreads widened 1.1bp.
Asian primary markets are having its busiest day yet in 2022 with 10 new dollar deals. Rating agencies are back to downgrading Chinese property developers with five downgrades on Monday including Shimao and Yuzhou.
KNOC raised $1.5bn via a 3-tranche deal. It raised:
Shriram Transport Finance raised $472mn via a 3.5Y social bond at a yield of 4.15%, 30bp inside initial guidance of 4.45% area. The bonds have expected ratings of BB–/BB (S&P/Fitch), and received orders over $960mn, 2x issue size. Proceeds will be used in accordance with the issuer’s social finance framework as well as for onward lending and other activities. STF’s social finance framework has received a second-party opinion from Sustainalytics and a limited assurance report from KPMG. The security on these bonds will be in the form of a exclusively earmarked specified pool of receivables. No other details were released on the receivables. Fund managers, hedge funds and pension funds took 92% of the deal, banks 4% and private banks 4%. Asia accounted for 66%, EMEA 18% and the US 16%. The new bonds are priced 47bp wider to its existing 4.4% 2024s that yield 3.68%.
A Second Party Opinion (SPO) in the ESG space refers to an independent review of the selection criteria for the projects financed ESG green bonds and of the allocation of funds. An SPO tries to provide assurance that the bond framework is aligned to accepted market principles like the ICMA Green Bond Principles for example. There are separate companies that provide SPOs, having been considered to have expertise and reputation in this field. Prominent players in this space include Sustainalytics, CICERO, Vigeo Eiris, ISS ESG, S&P Global amongst others,
“We will use our tools to support the economy and a strong labor market and to prevent higher inflation from becoming entrenched.” “We can begin to see that the post-pandemic economy is likely to be different in some respects. The pursuit of our goals will need to take these differences into account.” “We worked to improve the public’s access to instant payments, intensified our focus and supervisory efforts on evolving threats such as climate change and cyberattacks, and expanded our analysis and monitoring of financial stability,” he said.
On the possibility of a faster pace of policy tightening
Lou Crandall, chief economist at Wrightson ICAP
“It’s quite possible that the Fed is forced to be more aggressive in this cycle.” “You could see wage inflation numbers that require a more aggressive policy response.”
Guneet Dhingra, head of U.S. interest-rate strategy at Morgan Stanley
“The idea that the Fed sticks to a template of four rate hikes this year is challenged by what has already happened, with the pace of tapering accelerating in the past three months.” “If they need to hike fast, they will. There is a high degree of variability that could result in more than four hikes — or less — dependent on whether inflation is slower during the second half of the year. The Fed is showing urgency and being flexible.”
Bill Dudley, former New York Fed President
“The Fed will have to respond by taking interest rates above neutral well before the end of 2024.”
On China’s property woes continuing into 2022
Himanshu Porwal, emerging markets corporate credit analyst at Seaport Global
Garuda Creditors Submit Claims Worth $13.8bn