US markets slipped marginally ahead of the US consumer price index (CPI) for May, to be published later today. S&P was down 0.2% and Nasdaq was down 0.1% after wiping out some initial gains. Financials and Industrials led the losses with a drop of ~1% while Healthcare gained 1%. Economists are expecting the CPI to rise 4.7% from a year earlier, according to Dow Jones vs. April’s reading of 4.2%, the highest since 2008. US 10Y Treasury yields dropped by ~4bp to 1.49%, its lowest since October despite higher inflation expectations. European markets once again struggled for direction. DAX and FTSE closed 0.4% and 0.2% lower respectively while CAC closed 0.2% higher. US IG and HY CDS tightened ~0.2bp and ~0.4bp respectively. EU main and crossover CDS also tightened by ~0.5bp and 2.7bp respectively. Gulf markets closed higher tracking the oil prices. Saudi TASI was up 0.5% and UAE’s ADX was up 0.6%. Latam markets were mixed with Brazil’s Bovespa up 0.1%. Asian markets have opened higher ~0.5% and Asia ex-Japan CDS spreads widened 0.4bp.
New Bond Issues
- BoCom Financial Leasing $ 3Y sustainability notes IPG T+135bp area
- Hyundai Capital America $ 3Y/5Y/7Y IPTs T+85-90bp/T+105-110bp/T+125-130bp areas
- Ganzhou Jiankong Investment capped $270mn 3Y credit-enhanced bonds IPG 3.8% area
Lifestyle International raised $350mn via a 5Y at a yield of 4.8%, 40bp inside initial guidance of 5.2% area. The bonds are unrated and received orders over $2.3bn, 6.6x issue size. APAC took 98% of the bonds and EMEA 2%. Private bank orders took a solid 46% (with a 25-cent rebate), fund managers and hedge funds took 53%, and others 1%. Wholly owned subsidiary LS Finance (2017) is the issuer with a guarantee from the parent. Proceeds will be used to fund a tender offer of its 4.95% 2022s at a cash price of $1,011.52 per $1,000 in principal plus accrued interest alongside general corporate purposes. Its 4.95% 2022s currently trade at 101.
Agricultural Bank of China HK branch raised $1bn via a two-trancher. It raised $500mn via a 3Y bond at a yield of 0.743%, 40bp inside initial guidance of T+85bp area. It also raised $500mn via a 5Y bond at a yield of 1.318%, 38bp inside initial guidance of T+95bp area. The bonds have expected ratings of A1, and received orders over $5.6bn, 5.6x issue size. Proceeds will be used for general corporate purposes.
Fraser and Neave raised S$100mn via a 5Y bond at a yield of 2%. The bonds are unrated and received orders over S$225mn, 2.25x issue size. Fund managers, insurance companies and banks took 94% and the rest was taken by private banks. Funding arm F&N Treasury is the issuer with the parent providing a guarantee. The issuer retains redemption rights with a make-whole pledge on any interest payment based on the new prevailing benchmark rate of SORA-OIS + 0.5%. Proceeds will be used to fund working capital needs and capital expenditure, as well as to refinance debt.
KEB Hana Bank raised $600mn via a 5.5Y bond at a yield of 1.642%, or T+55bp. The bonds have expected ratings of A1/A+. Proceeds will be allocated to finance and/or refinance green and social projects in accordance with Hana’s sustainable financing framework.
Piraeus Bank raised €600mn via a PerpNC5.5 bond at a yield of 8.75%, 37.5bp inside initial guidance of 9%-9.25% area. The bonds have expected ratings of Ca/CCC-, and received orders over €2.15bn, 3.6x issue size. The coupon is fixed until the first reset date of December 16, 2026, and if not called, resets to the 5Y Mid-Swaps + initial margin of 919.5bp. The bonds are callable from and including June 16, 2026 to and including the first reset date and each interest payment date thereafter.
NatWest raised $1.5bn via a 6Y non-call 5Y (6NC5) bond at a yield of 1.645%, 25bp inside initial guidance of T+115bp area. The SEC registered bonds have expected ratings of Baa2/BBB. Proceeds will be used for general corporate purposes.
Happy to share that we have raised US$6mn in our Series A round led by
MassMutual Ventures and Citigroup. Click on the image below to read the press release.
To trade bonds in smaller denominations (starting at US$1,000) on BondbloX, sign up via the link below.
New Bond Pipeline
- Gajah Tunggal $ bond alongside tender offer
- Bayfront Infrastructure Capital II hires for $ multi-trancher backed by project finance portfolio
Rating Changes
- Peabody Energy Corp. Upgraded To ‘CCC’ From ‘SD’ By S&P After Debt Restructuring; Outlook Negative
- Banco BTG Pactual Upgraded On National Scale By S&P To ‘brAAA’, Global Scale ‘BB-/B’ Ratings Affirmed; Outlook Stable
- Fitch Upgrades Radiance to ‘B+’; Outlook Positive
- Fitch Upgrades Victoria’s plc Senior Secured Rating to ‘BB+’; Removes from UCO
- OneMain Holdings Inc. Outlook Revised To Positive From Stable By S&P On Strong Operating Performance; ‘BB-‘ Ratings Affirmed
- Fitch Revises Banca IFIS’s Outlook to Stable; Affirms IDR at ‘BB+’
- PT Gajah Tunggal Tbk. Outlook Revised To Developing By S&P; ‘CCC+’ Ratings Affirmed; Proposed Notes Rated Preliminary ‘B-‘
- Moody’s affirms Broadcom’s Baa3 rating; upgrades Broadcom Technologies’ Senior Notes to Baa2; outlook positive
Term of the Day
Bid-Offer Spread
The bid-offer/bid-ask spread is the difference between the ask/offer (buy) price and bid (sell) price, from an investor’s perspective. This is often used as a proxy for liquidity in the security – lower (tighter) the bid-ask spread, greater the liquidity available and higher (wider) the bid-ask spread, lower the liquidity available.
China Huarong’s 2.875% Perps have a wide bid-offer spread as seen in the picture below from the BondEvalue App. The price at which the investor has to buy the bond (offer/ask) is 81.25 and he/she can sell it at 79.09 (bid), showing a bid-offer spread of 2.16. In comparison, HSBC’s 6.375% Perp has a bid-offer spread of only 0.39.
Talking Heads
Top Gainers & Losers – 10-Jun-21*
.png)
