S&P was up 0.7% while the tech-heavy Nasdaq was lower again by 0.4%. Macro data underscored the economic recovery as US ADP payroll additions for the prior month came in at 742k, a strong number, although lower than expectations of 800k. Also ISM Non-Manufacturing in April fell only slightly to 62.7 vs. expectations of 64.2 and the prior 63.7 reading. US 10Y Treasury yields were flat at 1.59%. US IG CDS spreads were 0.3bp wider and HY widened 1.2bp.  EU main CDS spreads were 0.5bp tighter and crossover spreads tightened 3.2bp. Asian equity markets are mixed while Asia ex-Japan CDS spreads were 0.2bp wider.


New Bond Issues

  • BOC Aviation tap of $ 1.625% 2024s at T3+155bp area
  • Powerlong Real Estate capped $200m 5NC3 at 5.7% area; books $1.5bn
  • eHi Car Services $ 3.5NC2.5 at 8.5% area, alongside tender offer
  • ENN Natural Gas $ 5NC3 bonds at T+320bp area
  • Golden Energy and Resources $ 5NC3 bond at 9% area
  • KB Kookmin Card $ 5Y sustainability bond at T+110 area; books over $1bn

New Bond Issues 6 May

Naver raised $300mn via a tap of their 1.5% 2026 sustainability bond at a yield of 1.685%, 25bp inside initial guidance of T+110bp area. The bonds have expected ratings of A3/A-. Proceeds will be used to finance or refinance eligible green and social projects under Naver’s sustainable finance framework. Following the tap, the total amount outstanding on the bond is now at $800mn.

Commercial Bank of Qatar (CBQ) raised $700mn via a 5Y bonds at a yield of 2.054%, 30bp inside initial guidance of MS+145bp area. The bonds have expected ratings of A3/BBB+/A and received orders over $1.3bn, ~2x issue size.

JPMorgan raised $2bn via a PerpNC5 instrument at a yield of 3.65%, a solid 72.5bp inside initial guidance of 4.375% area. If not called on the call date of June 1, 2026, the coupon resets to the prevailing 5Y Treasury rate + 285bp. The instrument is structured as depositary shares each representing 1/10th interest in a share of fixed-rate reset non-cumulative preferred stock, Series KK.


New Bond Pipeline

  • Cathay Pacific hires for $ bond
  • GLP $ bond
  • JSW Hydro $ bond


Rating Changes


Term of the Day

Tender Offer

A tender offer is an offer made by an issuer to bondholders to buyback their bonds. In return, the bondholders could get either cash or new bonds of equivalent value at a specified price. The issuer does this to retire some of its old debt and can use retained earnings to fund the purchases without affecting the liquidity position of the company. Tender offers have a deadline date before which holders must tender their bonds back.

eHi Car Services has launched a 3.5NC2.5 dollar bond alongside a tender offer for its $400mn 5.875% 2022s at a purchase price of $1,002.5 plus accrued and unpaid interest per $1,000 in principal. The deadline is May 14. eHi said the tender offer is part of efforts to proactively manage its balance sheet liabilities and optimise its debt structure.


Talking Heads

“Patience is really an important tool for quite some time,” Evans said. Continuing the Fed’s bond purchases demonstrates the Fed is demonstrating it is “in it to win it and we are going to keep going and we are by golly going to be achieving, in this case, our 2% on average inflation objective,” he said. “I see our current approach as being a very patient one,” he said
“The most amount of credit risk you’re willing to take and the most amount of duration risk you’re willing to take — that’s where the most positive spot is right now,” said Robertson. “That’s where I’m going to get the biggest bang for my buck.” “It’s extremely hard for me to see a big shift in the fixed-income markets anytime soon and investors are being too aggressive with respect to inflation expectations,” said Robertson. “Short-term rates are going to stay lower for longer than investors think.” “The supply demand dynamics are still fully in play, even in the face of an absolutely incredible amount of high-yield issuance,” said Robertson. “The Fed has now shown too many times that they will be there to support,” Robertson said. “They can taper bond purchases and they would still be in a position where interest rates should stay anchored at zero on the short end.”
“I expect the (yield) curves in the eurozone and the U.S. to steepen, driven by better equity markets and ahead of the ADP and NFP print which should be supportive for the inflationary thesis,” said Galy.

On Colombia’s intentions to cut fiscal deficit and defend investment grade rating – Jose Manuel Restrepo, Colombia’s new finance minister

“Colombia, with this proposal we are building, is absolutely clear that we want to maintain investment grade,” Restrepo said. “This is a country that has historically been responsible with its public finances.” “We don’t want to hurt the middle class,” he said. “Colombia is aware that it must necessarily guarantee the stability of its public finances and its stability from a social perspective,” the minister said. “The two things are closely linked because long-term growth is also associated with guaranteeing that social stability.”

Top Gainers & Losers – 6-May-21*

BondEvalue Gainer Losers 6 May
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