Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

US markets reversed their early losses ending the day slightly stronger as better than expected jobless claims seemed to mitigate the taper fears after the release of FOMC minutes – S&P and Nasdaq gained 0.1% each. Most sectors ended in the green. IT and Healthcare up 1% and 0.9% respectively, led the gains while Energy, down 2.7% pulled down the indices. European markets closed lower – CAC was down 2.4%, FTSE 1.5% and CAX 1.3% lower. Saudi’s TASI and UAE’s ADX extended their losses and were down 1.3% and 1% respectively. Brazil’s Bovespa reversed its losses and was up 0.5%. Most Asian markets started in the red – HSI, Shanghai and Nikkei were down between 0.7% and 1.7% while Singapore’s STI was up 0.7%. US 10Y Treasury yields fell 2bp to 1.24%. US IG tightened slightly by 0.1bp while the HY CDS spreads widened 1.4bp. EU Main and Crossover CDS spreads widened 0.7bp and 2.9bp respectively. Asia ex-Japan CDS spreads were 6.1bp tighter.

US jobless claims for the prior week came at 348k, the lowest since the onset of the pandemic and falling for the third straight week vs. 377k in the previous week. The 4-week moving average was at 377.75k, down 19k from the previous week. Pre-pandemic, on March 14, 2020 the average was 225.5K. Hong Kong’s CPI (YoY) for July stood at 3.7% vs. 0.7% in June.

• Perusahaan Pengelola Asset hires for $ bond

Rating Changes

• Fitch Upgrades Devon Energy’s Long-Term IDR to ‘BBB+’; Outlook Stable

• Moody’s downgrades KIPCO’s ratings to Ba2 from Ba1, maintains negative outlook

• Talen Energy Supply LLC Downgraded To ‘B-‘ From ‘B’ By S&P On Weak Operating Performance and High Leverage; Outlook Stable

• Serba Dinamik Rating Lowered To ‘CCC’ By S&P On Escalating Refinancing Risks Amid Uncertain Funding Access; Outlook Negative

• Fitch Downgrades CLISA’s IDRs to ‘RD’ on Exchange Completion; Subsequently Upgrades to ‘CCC’

• Iochpe-Maxion S.A. Outlook Revised To Positive From Negative On Improved Profitability And Leverage; Ratings Affirmed

• Fitch Revises VF Ukraine’s Outlook to Positive on Sovereign Action; Affirms at ‘B’

• Fitch Revises Borets’ Outlook to Stable; Affirms at ‘BB-‘

• Fitch Places AXA Singapore on Watch Negative Pending HSBC Acquisition

• Fitch Assigns Turkmenistan ‘B+’ IDR; Outlook Stable

Term of the Day:

Market Value Leverage

Market Value Leverage (MVL) or Market Value based Leverage is a metric used by Moody’s to measure a company’s debt with respect to its investment portfolio. Moody’s measures it as the company’s “adjusted net debt divided by the estimated market value of its investment portfolio”.

Moody’s downgraded KIPCO to Ba2 from Ba1 with a negative outlook based on insufficient market value leverage (MVL). Moody’s said that KIPCO’s MVL as of June 2021 stands at 48.5% and with the additional capital, this will improve to 40-45%, still higher than the guidance of 40% required for the Ba1 rating.

Talking Heads