S&P ended flat while Nasdaq was down 0.4% as markets traded in a narrow range. US 10Y Treasury yields were 4bp wider at 1.69%. US March CPI is due today and analysts are interested in seeing how much the increased producer prices in March may feed through the inflation data. European equities were slightly lower as DAX and CAC fell 0.1% and FTSE was down 0.4%. US IG CDS spreads were 0.1bp wider and HY was 1.7bp wider. EU main CDS spreads were 0.6bp wider and crossover spreads widened 2.7bp. Asian equity markets are higher by 0.5% and Asia ex-Japan CDS spreads were 1.1bp wider.
New Bond Issues
- $500mn via a 5Y bond at a yield of 1.54%, 15bp inside initial guidance of T+80bp area
- $850mn via a 10Y bond at a yield of 2.5% 30bp inside initial guidance of T+125bp area
- $650mn via a 20Y bond at a yield of 3.238%, 30bp inside initial guidance of T+130bp area
The bonds have expected ratings of A2/A/A-. Proceeds will be used for debt refinancing and general corporate purposes. The notes will be issued by CK Hutchison International (21). Hong Kong-listed CK Hutchison Holdings is the guarantor. The bonds carry a 1/3/6 month par call for the 5/10/20Y bonds respectively. The new 10Y and 20Y bonds priced inside its existing dollar bond curve given that its older 2.5% 2030s and 3.375% 2050s are currently yielding 2.54% and 3.26% respectively, wider than the new bonds despite the shorter tenor.
Bank Mandiri raised $300mn via a 5Y sustainability bond at a yield of 2.231%, 40bp inside initial guidance of T+175bp area. The bonds have expected ratings of Baa2/BBB- and received orders over $2.5bn, 8.3x issue size. Asia took 85% of the notes and EMEA 15%. Fund managers were allocated 74%, sovereign wealth funds 12%, insurers and pension funds 6%, bank treasury 6% and private banks and others 2%. The bank is currently 60%-owned by the government via Indonesia’s Ministry of State-Owned Enterprises. There is a change of control put at 101 if the Indonesian government ceases to directly or indirectly own and control more than 51% of the issuer and there is a rating downgrade. Proceeds will be used to finance or refinance, in eligible sustainability bond projects aligned to prescribed eligibility criteria under the bank’s sustainability bond framework.
Petron raised $550mn via a senior PerpNC5 at a yield of 5.95%, 35bp inside initial guidance of 6.3% area. The bonds are unrated and received orders over $1.9bn, 3.4x issue size. Asia took 90% and EMEA 10%. Fund/asset managers booked 57%, bank treasuries 37%, and private banks, corporates and others 6%. The coupon resets in the fifth year and every five years thereafter to the prevailing US Treasury yield plus the initial spread of 507.4bp. If there is a change of control event, the issuer can choose either to redeem the securities at 101or have a coupon step-up by 250bp. There is a dividend stopper and a pusher. Proceeds will be used for repayment of debt and general corporate purposes.
Genting Malaysia raised $1bn via a 10Y at a yield of 3.882%, 40bp inside initial guidance of T+260bp area. The bonds have expected ratings of BBB/BBB and received orders over $2bn, 2x issue size. US investors took 44%, EMEA 32% and Asia 24%. Asset/fund managers were allocated 86%, insurers, pension funds and sovereign wealth funds 8% and banks and private banks 6%. Proceeds will be used for refinancing, capital investments and working capital.
Metallurgical Corporation of China raised $500mn via a senior PerpNC3 at a yield of 2.95%, 35bp inside initial guidance of 3.3% area. The bonds have expected ratings of Baa1, and received orders over $1.7bn, 3.4x issue size. APAC bought 99% and EMEA/offshore US 1%. Fund/asset managers and corporates received 46%, banks and financial institutions 27%, insurance and sovereign wealth funds 27%. The distribution rate will be reset at an initial spread of 259.5bp over the prevailing 3Y Treasury yield plus a 300bp step-up if the perps are not called on the first call date on April 20 2024. Proceeds will be used for refinancing and general corporate purposes.
Kia raised $700mn via a dual-trancher. It raised $300mn via a 3Y bond at a yield of 1.105%, 35bp inside initial guidance of T+110bp area. It also raised $400mn via a 5.5Y green bond at a yield of 1.789%, 35bp inside initial guidance of T+125bp area. The bonds have expected ratings of Baa1/BBB+. Proceeds will be used to finance or refinance new and/or existing eligible green projects under Kia’s green finance framework.
New Bond Pipeline
- Tencent $ bond
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China Water Affairs Group $ green bond
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BOC Aviation $ bond
- Putian State-owned Asset Management $ bond
- IRFC $ 5Y bond
Rating Changes
- Fitch Upgrades Zambia’s LC IDR to ‘CCC’; Affirms FC IDR at ‘RD’
- Russian Shipping Company Sovcomflot Upgraded To ‘BBB-‘ By S&P On Increased Financial Flexibility; Outlook Stable
- Fitch Upgrades Sovcomflot to ‘BBB-‘; Outlook Stable
- Moody’s upgrades L Brands’ CFR to Ba3
- Moody’s upgrades United Rental’s CFR to Ba1; Outlook stable
- Moody’s downgrades Global Liman ratings, maintains negative outlook
- Fitch Downgrades Yunnan Energy to ‘BBB-‘; Outlook Negative
- Li & Fung Downgraded To ‘BBB-‘ By S&P Due To Deteriorating EBITDA And Cash Position; Stable Outlook
- Evergrande And Subsidiaries Outlooks Revised To Stable By S&P On Improving Capital Structure, Liquidity; Ratings Affirmed
- Fitch Revises Cameroon’s Outlook to Stable; Affirms at ‘B’
- Outlook On Russian Steel And Coking Coal Producer Evraz Revised To Stable On Strong Steel Markets; ‘BB+’ Rating Affirmed
- GMS Inc. Outlook Revised To Stable From Negative By S&P, ‘BB-‘ Rating Affirmed; Proposed Senior Unsecured Notes Rated ‘B’
- Fitch Places ChemChina on Rating Watch Positive
- Fitch Revises Outlook on ANZ to Stable; Affirms at ‘A+’
- Fitch Revises Westpac Banking Corporation’s Outlook to Stable from Negative; Affirms Ratings
- Fitch Revises Outlook on National Australia Bank and Subsidiary to Stable; Affirms at ‘A+’
- Fitch Revises Outlook on Hyundai Capital and Hyundai Card to Stable; Affirms Ratings
- Fitch Rates Banco GNB Sudameris S.A.’s Upcoming Tier 2 Notes ‘BB-(EXP)’
- Fitch Revises Outlook on Meiji Yasuda Life to Stable; Affirms IFS Rating at ‘A+’
- Ronshine China Holdings Outlook Revised To Negative By S&P On Weak Profitability; ‘B+’ Rating Affirmed
- Fitch Revises Outlook on Ronshine to Negative; Affirms at ‘BB-‘
- Fitch Revises Metinvest’s Outlook to Stable; Affirms IDR at ‘BB-‘
Term of the Day
Greenium
Greenium is a term that refers to the premium that investors pay when buying green bonds vs. conventional non-green bonds. Green bonds that trade with a greenium indicate strong investor demand for those bonds, which pushes prices higher and yields lower compared to conventional bonds. FT wrote a story noting that governments and corporates raising money through green debt are benefiting from greenium with an example of the greenium in German Bunds growing over time.
We at BondEvalue did a quantitative study last year evaluating whether greenium exists by looking at several bond pairs (green vs. non-green). To read the report, click here
Talking Heads
Top Gainers & Losers 13 Apr 2021*
