US Treasury yields jumped on Thursday following the risk-off move the day prior. The 2Y rose 28bp to back above 4% at 4.22% while the 10Y rose 10bp to 3.58%. This was largely on the back of an announcement from 11 American banking majors, including JP Morgan, Morgan Stanley and Bank of America, to deposit $30bn into First Republic Bank, which many had identified as vulnerable and most at risk after SVB’s collapse. The move, which was orchestrated by the US government, triggered a 2.2% gain in the S&P 500 bank index as well as a rally in the broader equity indices the S&P and Nasdaq rose 1.76% and 2.48% respectively. A 25bp hike at next week’s FOMC meeting is on the cards with a probability of 86%, up from 55% yesterday. The peak Fed funds rate rose 10bp to 4.98%. 

Data published by the Fed showed $152.85bn in borrowing from the discount window — the traditional liquidity backstop for banks — in the week ended March 15, a record high, up from $4.58bn the week prior. The previous all-time high was $111bn reached during the 2008 financial crisis. Further, an additional $11.9bn was borrowed from the Fed’s new emergency backstop fund, the Bank Term Funding Program (BTFP), launched Sunday. Taken together, the credit extended through the two backstops shows a banking system that is still fragile and dealing with deposit migration in the wake of the failure of SVB and Signature Bank last week. Credit spreads in the US eased US IG and HY CDS spreads tightened 5.3bp and 25.9bp respectively. 

European equity markets inched higher as well. European main and Crossover CDS spreads eased 4.6bp and 39.0bp respectively. Asia ex-Japan CDS spreads tightened 3.6bp. Asian equity markets have opened in the green.

 New Course on Bonds for Individual Investors | 13 and 27 April 2023

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New Bond Issues

New Bond Issues 17 Mar 23


New Bonds Pipeline

  • Shinhan Bank hires for $ senior bond
  • REC hires for $ Long 5Y Green bond
  • Qatar plans for $ bond

Rating Changes



Term of the Day: Subordinated Bonds

Subordinated bonds refer to bonds that rank below senior debts on the capital structure. In the event of liquidation, holders of subordinated debt would only be paid after all the senior debt is repaid. Thus, the ratings and yield of subordinated debt tend to be lower and higher respectively, to account for the greater risk associated with subordinated vs. senior debt.

There are different kinds of subordinated debt that can include perpetuals/AT1 CoCos, payment-in-kind notes, mezzanine debt, convertible bonds, vendor notes etc. Subordinated debt rank higher to preferred equity and common equity in the capital structure.


Talking Heads

Jeffrey Gundlach, the chief executive of DoubleLine Capital
“With all that’s going on I think a recession is probably within four months at the most.”
Gordon Ip, Value Partners Group Ltd’s co-chief investment officer of fixed income
“It’s the worst combo — a mixed bag of negotiating parties, and a wounded property market. Timewise, it will likely be unrealistically long and makes internal rates of return less attractive … We decided to not do property restructuring probably around second half of 2022.”
Adam Kurpiel, Societe Generale SA strategist
“With the sharp drop in Treasury yields and market pricing out hikes, investors remain on high alert ahead of the FOMC meeting … Price action in bonds, higher volatility and continued pressure on risky assets show that we are not out of the woods yet.”
BMO Capital Market strategists
“We anticipate that there will be further strains evident throughout markets and the real economy as Fed Chair Powell retains a decidedly restrictive policy stance.”

Top Gainers & Losers – 17-March-23*


BondEvalue Gainer Losers 17 Mar 23

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