US Treasury yields were largely flat yesterday across the curve and the peak fed funds rate was unchanged for the May meeting. CME probabilities are showing a 41% probability of a 25bp rate cut in September with a status quo expected in the May, June and July meetings. For the next meeting in May, markets expect a 57% chance of rates being unchanged and a 43% chance of a 25bp hike by the Fed. US IG and HY CDS spreads tightened 4.4bp and 23bp respectively as the broad risk-off sentiment eased. The S&P and Nasdaq ended higher on Wednesday, up by over 1.4% and 1.8% respectively.

European equity markets ended higher too. European main CDS spreads tightened by 6bp and Crossover spreads were 24.5bp tighter. Asia ex-Japan CDS spreads tightened by 5.8bp and Asian equity markets have however opened in the red this morning.

New Bond Issues

  • Northern Star Resources $ 10Y at T+300bp area

New Bond Issues 30 Mar 23

Korea Mine Rehabilitation and Mineral Resources (KOMIR) raised $500mn via a Long 5Y bond at a yield of 5.552%, 25bp inside the initial guidance of T+210bp area. The senior unsecured notes have expected ratings of A1/A+, and received orders over $3bn, 6x issue size. Proceeds will be used for general corporate purposes including repayment of maturing debt, but not for any activities relating to development of coal mines. The bonds carry a change of control put at 100 if the central government of South Korea ceases to own and control at least 51% of KOMIR. Asset and fund managers received 70%, banks 14%, central banks, other institutions and insurers 10%, and private banks/brokers 6%. Asia took 79% and EMEA 21%.The new bonds are priced 36.2bp wider to its existing 4.125% 2027s that yield 5.19%.

Al Rajhi Sukuk raised $1bn via a 5Y Sustainability sukuk at a yield of 4.774%, 40bp inside the initial guidance of T+150bp area. The senior unsecured sukuks have expected ratings of A1/A-, and follow the Wakala Murabaha structure. Proceeds will be used to (re)finance eligible sustainable projects.


New Bonds Pipeline

  • Cyprus hires for first ever sustainable bond
  • REC hires for $ Long 5Y Green bond
  • Shinhan Bank hires for $ senior bond


Rating Changes

  • Moody’s upgrades Netflix’s senior unsecured notes to Baa3 from Ba1; the outlook is positive
  • Fitch Upgrades Anglo American to ‘BBB+’; Outlook Stable
  • Fitch Revises Freeport Indonesia’s Outlook to Positive; Affirms at ‘BBB-‘

Term of the Day

Bridge Financing

Bridge financing is a temporary form of financing used to cover the borrower’s short-term costs until the moment when regular long-term financing is secured. This form of financing ‘bridges’ the gap between when the borrower’s funds are set to dry up and its next long-term funding option.

ET had reported that Adani Group was in talks with lenders to extend a $3bn bridge loan’s tenor to ~5 years or more from the existing 18 months. Adani Group later refuted the report.


Talking Heads

On Moody’s seeing limited risks from banking crisis on US credit profile

“The rapid deterioration in the operating environment for US (Aaa stable) regional banks over the past two weeks has indicated higher banking sector risk than we had previously factored in the sovereign’s credit profile”…does not “expect significant direct fiscal costs for the sovereign from the current banking sector stress”

On Barclays Strategist Joe Abate Sees A ‘Second Wave’ of Deposit Outflows Coming for Banks

Rrecent tumult regarding deposit safety may have awakened “sleepy” depositors and started what we believe will be a second wave of deposit departures, with balances moving into money market funds… depositors appear to have paid little attention to the unsecured risk they faced with balances above the insurance cap. And they seem to have largely ignored the low interest rate paid on their deposits… we think that depositors have just awoken to their ability to earn more yield in a money market fund with potentially less risk”

On Turkey’s Erdogan Blames Rate Hikes for Market Turbulence in West

“Europe wanted to continue with high interest rates, but their theory about high rates did not hold. Now they’re paying the price”

On UBS-Credit Suisse Deal ‘Clear Step Toward Stability,’ – Vontobel CEO, Zeno Staub

“It’s a very clear step toward stability… The top priority was achieved. The first-order consequences are very positive and now there’s a lot of work to be done.”


Top Gainers & Losers – 30-March-23*

BondEvalue Gainer Losers 30 Mar 23

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