US Treasury yields were slightly lower across the curve on Wednesday. The peak Fed funds rate was 3bp lower at 4.88% for the June 2023 meeting. The probability of a 25bp hike at the FOMC’s February 2023 meeting stands at 99%. US equity markets ended slightly lower with the S&P and Nasdaq down 0.02% and 0.18%. US IG CDS spreads tightened by 0.2bp while HY spreads were 1.5bp wider. The Bank of Canada hiked its key interest rate to 4.5%, the highest in 15 years, and said that it would likely hold off regarding further increases.

European equity markets ended flat. The European main and crossover CDS spreads widened by 0.7bp and 3.4bp respectively. Asian equity markets have opened higher today. Asia ex-Japan CDS spreads were flat. Singapore’s December core inflation rose to 5.1%, slightly higher than forecasts of a 5% print.

Digital Assets

New Bond Issues

New Bond Issues 26 Jan 23

Ziraat Bank raised $500mn via a long 3Y bond at a yield of 9.75%, 25bp inside initial guidance of 10% area. The senior unsecured bonds have expected ratings of B3/B-. Proceeds will be used for general corporate purposes. The new bonds are priced at a new issue premium of 63bp to its existing 5.375% bonds due March 2026 that yield 9.12%.


New Bonds Pipeline

  • Khazanah Nasional Bhd hires for $ bond


Rating Changes


Term of the Day


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.

India’s central bank issued about $1bn in debut sovereign green bonds – it sold INR 40bn ($500mn) in green bonds due 27 January 2028 at yield of 7.10%, a greenium of 6bp inside the existing 5Y benchmark which was trading at 7.16%. Similarly it also sold INR 40bn ($500mn) in green bonds due 27 January 2033 a yield of at 7.29%, 6bp inside the 10Y benchmark, which was at 7.35%.


Talking Heads

On Debt-Limit Showdown Splits Credit Raters on US Downgrade Trigger

Richard Francis, senior director at Fitch Ratings

“If for whatever reason they get beyond the X-date and stop paying obligations – whatever they are – that would not be consistent with a AAA rating. And if they miss a principal or interest payment, that would be a default”

William Foster, a senior credit officer at Moody’s

“If they had to go to prioritizing, we’d continue to focus on the debt payments themselves… If a payment was missed, that would be a default. But other payments that aren’t related to debt service — if you prioritized those and delayed others – that would be separate and not what we’d be focused on in terms of a credit event.”

Joydeep Mukherji, a managing director at S&P

“That’s a hard thing to talk about because we’ve never been there before… we don’t know at all that prioritization will happen or not — because the only person who could answer the question is the US Treasury.”

On ECB Governors flagging interest rate rises beyond March

Gabriel Makhlouf, Ireland’s central bank governor

Must “wait and see exactly what the data tells us”… “Bearing in mind that inflation is very high and core inflation has actually gone up slightly, it would not be surprising to see us continue on this path of interest rate rises beyond the first quarter”

Joachim Nagel, president of Bundesbank

“Wouldn’t be surprised if we have to keep raising rates even after the two announced steps”

On U.S. corporate bond rally stumbling on ‘Goldilocks’ skepticism

Barclays strategists

“Credit spreads have rallied across the board since the beginning of the year despite heavy (new bond) issuance and are at multi-month tights. This puts the credit market at odds with economic forecasts and the rates market”

Bruce Clark, senior macro strategist at Informa Global Markets

“There is a collision waiting to happen between market expectations of a Fed rate cut later in the year and the growing evidence of a global economic recovery that may keep inflation high so might not lead to a reversal in Fed policy”


Top Gainers & Losers – 26-January-23*

BondEvalue Gainer Losers 26 Jan 23

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