S&P ended up 0.7%, setting a new record while Nasdaq closed 0.9% higher with tech stocks rallying. US non-farm payrolls (Term of the Day, explained below) for April rose by just 266k vs. a forecast of 978k, and significantly lower to March’s reading of 770k. US 10Y Treasury yields rebounded to 1.59% after hitting a two month low of 1.47%. The 30Y yield also dropped to 2.16%, its lowest since March 1 before recovering to 2.29%. Friday also witnessed a ransomware cyber-attack on the largest fuel pipeline in US. A prolonged shutdown of the pipeline could result in a spike in the gasoline and diesel prices. US IG CDS spreads were 0.9bp tighter and HY tightened 3.3bp. EU main CDS spreads were 0.8bp tighter and crossover spreads tightened 3.2bp.Asian equity markets are off to a positive start, up ~0.5% while Asia ex-Japan CDS spreads were flat. It’s a busy Monday at the Asian primary markets with nine new dollar deals, including ones from Agile, KWG, CIFI, JSW Hydro and Cathay Pacific.
New Bond Issues
- Agile Group Holdings $ 5NC3 IPG 6% area
- KWG Group $ 5.25NC3.25 green notes at 6.5% area
- CIFI Holdings $ 5.25NC3/7NC4 green bonds at 4.95%/5.25% areas
- JSW Hydro Energy $ 10NC5 green bonds IPG 4.5% area
- Zhongliang 364-day $ green notes at 9.625% area, alongside tender offer
- Pakuwon Jati tap of 4.875% 2028 notes at IPG of 4.6% area
- Cathay Pacific $ S 5.25Y bond at 5.2% area
- GLP $ green sub PerpNC5 at 4.875% area
- Korea Expressway $ sustainability bond at T+80bp area
Redco raised $65mn via a tap of their 8% sustainability notes due 2022 at a yield of 8.4%, 35bp inside initial guidance of 8.75% area. The bonds have expected ratings of BB-, and received orders over $400mn, ~1.8x issue size. Proceeds will be used to refinance certain of the existing medium-to long-term offshore indebtedness which will become due within one year and in accordance with their Sustainable Finance Framework.
New Bond Pipeline
- China Railway Construction hires for USD/EUR bonds
- Hopson Development hires for USD bonds
- Vista Land & Lifescapes USD Jul 2027
- Fitch Upgrades National Bank of Greece to ‘B-‘; Positive Outlook
- Fitch Upgrades Piraeus Bank to ‘CCC+’ on De-Risking and Capital Increase
- Fitch Upgrades HCA to ‘BB+’; Stable Outlook
- Loxam SAS Upgraded To ‘B+’ From ‘B’ By S&P On Resilient Operating Performance Through The COVID-19 Pandemic; Outlook Positive
- Navient Corp. Outlook Revised To Stable By S&P On Better-Than-Expected Performance; ‘BB-/B’ Ratings Affirmed
- Starbucks Corp. Outlook Revised To Stable From Negative By S&P On Expected Leverage Decline; ‘BBB+’ Rating Affirmed
- Energy Transfer L.P. Outlook Revised To Stable From Negative By S&P On Accelerated Leverage Reduction; ‘BBB-‘ Rating Affirmed
- Fitch Affirms BorgWarner’s IDR at ‘BBB+’; Outlook Revised to Stable
- Fitch Affirms Fifth Third Bancorp at ‘A-‘; Outlook Revised to Stable
- Fitch Affirms Capital One at ‘A-‘/’F1’; Outlook Revised to Stable
- Fitch Withdraws Ratings for AES Panama, S.R.L. Due to Debt Refinancing
The Week That Was
US primary market issuances rose to $30bn, up 56% vs. $19.2bn in the week prior. The rise in issuance can be attributed to both IG and HY issuances. IG deals were at $18.4bn vs. $13.2bn in the prior week and HY issuances were at $10.2bn vs. $5.95bn in the prior week. The largest deals in the IG space were led by eBay’s $2.5bn three-trancher and JPMorgan’s $2bn 3.65% PerpNC5. The HY space was led by CHS’ $1.44bn and Vistra Operations $1.25bn. In North America, there were a total of 47 upgrades and 27 downgrades combined across the three major rating agencies last week. LatAm saw $3.8bn in new bond deals last week vs. $2bn in the week prior with Chile’s $1.7bn 20Y bond leading the table followed by Orbia Advance’s $1.1bn dual-trancher. EU Corporate G3 issuance saw a sharp increase in issuance last week to $24.9bn vs. $13bn in the week prior led by Barclays’ and Eni SpA’s €2bn ($2.4bn) two-tranchers. Last week also saw large AT1 deals from European lenders with Banco Santander’s combined $1.9bn USD & EUR Perps and Deutsche Bank’s €1.25bn ($1.53bn) PerpNC7 AT1. Across the European region, there were 27 upgrades and 15 downgrades across the three major rating agencies. GCC and Sukuk G3 issuances were at $1.9bn vs $1.75bn in the week prior with Etisalat’s €1bn ($$1.2bn) dual-trancher and CBQ Finance’s $700mn being the only deals. Across the Africa/Middle East region, there were 0 upgrades and 3 downgrades across the three major rating agencies. APAC ex-Japan G3 issuances were marginally higher at $6.1bn vs. $5.4bn in the prior week led by Westpac’s €1.2bn ($1.5bn) 10Y, followed by Khazanah’s $1bn dual-trancher and ENN Clean Energy’s $800mn 5Y deals. In the Asia ex-Japan region, there were 2 upgrades and 3 downgrades combined across the three major rating agencies last week.
Term of the Day
Non-Farm Payrolls (NFP)
Non-Farm Payrolls (NFP) is a key data point that is released by the US Bureau of Labor Statistics (BLS) usually on the first Friday of every month. NFP measures net changes in employment excluding agricultural, local government, private household and not-for-profit sectors over the past month and is a key economic indicator in the United States. A high reading of the NFP is considered a positive sign for the US economy while a negative reading is considered a sign of a slowdown in the US jobs market. The NFP indicator is closely watched by traders, especially as it is one of the first monthly economic indicators to be released, and because of the direct relationship between job creation and interest rates, and hence economic growth.
Top Gainers & Losers – 10-May-21*