Euro zone bond yields meanwhile hovered around seven week highs amid rising expectations of inflation as the Euro 5Y5Y breakeven at a three-year high. Germany’s benchmark 10Y Bund yield was at -0.37% and France’s 10Y bond yield at -0.03% and Greece’s 10Y at 0.79%. Pictet Wealth Management strategist Frederik Ducrozet said, “The ECB will have to articulate a more constructive economic outlook without giving the impression that a tighter policy stance is on its way, especially as the new strategy was just translated into a new, more dovish guidance.”
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New Bond Issues
- DBS Group $ 5.5Y bond at T+65bp area
- China Everbright Bank Luxembourg branch $ 3Y bond at T+80bp area
- Keppel S$ PerpNC3 bond at 3% area
Starhill Global REIT raised $125mn via a 7Y bond at a yield of 2.23%, 12bp inside the initial guidance of 2.35% area. The bonds have expected ratings of and received orders over $220mn, 1.8x issue size. Proceeds will be used to refinance debt and fund capital expenditure and working capital needs. The bonds will be issued by Starhill Global REIT MTN and guaranteed by HSBC Institutional Trust Services Singapore. The issuer will have a redemption option on a make-whole basis until maturity on September 13 2028. Fund managers and insurance companies bought 69%, banks 27% and private banks and other investors 4%. Singapore accounted for 99%. Starhill last raised S$100mn via a PerpNC5 priced at 3.85% in December.
KWG Group Holdings raised $100mn via a tap of their 5.95% 2022s at a yield of 6.5%, 15bp inside initial guidance of 6.65% area. The bonds are rated BB-. The Hong Kong-listed Chinese real estate company plans to use proceeds for debt refinancing.
Singapore statutory board National Environment Agency (NEA) raised S$1.65bn via its inaugural green dual-trancher. It raised S$350mn via a 10Y bond at a yield of 1.67%, unchanged from initial guidance. It also raised S$1.3bn via a 30Y bond at a yield of 2.5%, 5bp inside initial guidance of 2.55% area. The bonds are unrated and received orders over S$2.15bn, 1.3x issue size.
New Bonds Pipeline
- JSW up to $1bn planned issuance
- ICBC $6bn AT1 perp
- JR East £ 7Y and € 13Y/18Y tranches
- Denso hires for $ 5Y sustainability notes
- GF Holdings (Hong Kong) Corp hires for $ SBLC-backed bond
Rating Changes
- Province of Buenos Aires Issuer Credit Rating Raised To ‘CCC+’ From ‘SD’ By S&P On Completion Of Debt Exchange, Outlook Stable
- Fitch Upgrades Greek Banks’ Senior Preferred Debt on Better Recovery Prospects
- Packaged Food And Beverage Maker Tingyi Upgraded To ‘A-‘ From ‘BBB+’ By S&P On Strong Market Position; Outlook Stable
- Chalco Outlook Revised To Positive By S&P On Stronger Group Credit Profile; Rating Affirmed; SACP Revised Up On Lower Leverage
Term of the Day
Tap
A ‘tap’ refers to a bond issuance wherein the issuer issues more of an existing bond rather than issue a new bond. Taps, also known as re-openings, are common in the bond market and can be quoted as a price or yield during the initial price guidance stage of issuance.
KWG Group raised $100mn via a tap of their initially outstanding $200mn 5.95% bonds due August 2025.
Talking Heads
“The risks are tilted to the upside right now.” “If these transitory factors lead to higher inflation expectations and accelerated wage growth, the rate of inflation could rise perceptibly over the longer term.”
“Right now there is a disconnect between wage data, which remains flat, and the anecdotal evidence of some higher wage demands and pockets of staff shortages.”
“This is the key discussion they are having: not whether to beef up their ongoing asset purchase programme to follow PEPP but how much flexibility there will be.”
Top Gainers & Losers – 07-Sep-21*
