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US Treasury yields move slightly higher across the curve. Economic data continued to underscore strength in the US economy. Preliminary Durable Goods Orders indicated a 2.6% jump in March, higher than expectations of 2.5% and the prior 0.7% reading. The preliminary Capital Goods Orders reading rose 0.2% in April, in-line with expectations, and lower than the prior month’s revised 0.4% print. The US Treasury 5Y auction saw modest demand, after seeing a strong 2Y auction a day earlier. The bid-to-cover on the 5Y notes came at 2.39x vs 2.41x last month and a yield of 2.659%, tailing by 0.5bp. US IG CDS spreads widened 0.9bp and HY spreads were 7bp wider. S&P and Nasdaq closed marginally higher.
European equity indices ended lower. European IG CDS spreads widened 1.5bp while crossover spreads were 9.2bp wider. Asian equity markets have opened mixed today. Asia ex-Japan IG CDS spreads were 0.6bp wider.
Indika Energy raised $350mn via a 5NC2 bond at a yield of 8.75%, 12.5bp inside initial guidance of 8.875% area. The senior guaranteed notes are rated Ba3/BB- (Moody’s/Fitch). The guarantors are Indika Inti Corpindo PT, Tripatra Multi Energi PT, Tripatra Engineering PT, Tripatra Engineers & Constructors PT and Tripatra Singapore Pte Ltd. Proceeds will be used to redeem a portion of its 2025s under the tender offer and through open-market repurchases. It may also be used to fund plans to expand non-coal related businesses like its EV and renewable energy business. The bonds have a change of control put at 101.
Ziraat Bankasi raised $500mn via a 10.25NC5.25 Tier 2 bond at a yield of 9%, 25bp inside initial guidance of 9.25% area. The subordinated notes are rated CCC+ (Fitch). Proceeds will be used for general corporate purposes.
Korea Ocean Business Corp raised $600mn via a two-part offering. It raised $300mn via a 3Y bond at a yield of 5.41%, 35bp inside initial guidance of T+95bp area. It also raised $300mn via a 5Y bond at a yield of 5.373%, 35bp inside initial guidance of T+105bp area. The senior unsecured are rated Aa2/AA- (Moody’s/Fitch). Proceeds will be used for general corporate purposes.
Nanning Communications raised $300mn via a 3Y bond at a yield of 7.3%, 20bp inside initial guidance of 7.5% area. The senior unsecured notes are rated BBB- (Fitch). The issuer is Nanning Communications Investment Group Co Ltd. The bonds have a change of control put at 101. Proceeds will be used to repay existing offshore debt in accordance with the Sustainable Finance Framework and the NDRC pre-issuance certificate.
Bid-to-cover is a ratio of the number of bids or orders received for a particular security issuance vs. the amount issued. The bid-to-cover ratio indicates the demand for an issuance – higher the ratio, higher the demand and lower the ratio, lower the demand.
On Intervention Risk Rising Going Into BOJ Meeting – BofA Japan’s Shusuke Yamada
“For the BOJ to support the yen, it should acknowledge that policy has been accommodative, that the next hike is as imminent as June, and that the terminal rate would be higher than priced… smaller and more frequent interventions to push the dollar-yen rate down”
On HSBC saying growing Chinese wealth fueling client investments in US
“Chinese investors are becoming very sophisticated. For most Asian investors, the first port of call is the US.
On Bonds at Risk from Asia’s Most Inflation-Sensitive Central Bank
Brian Tan, Barclays economist
“Inflation is the number one priority for the most inflation-sensitive central bank in the region”
Ralph Recto, Philippine Finance Secretary
“We’ve had a relatively stable currency… (hitting 59) would affect our ability to reduce interest rate going forward, I suppose”