US Treasury yields continued to move lower across the curve by 4-7bp as softer data continued to keep a bid on Treasuries. The US Producer Price Index (PPI) in April fell to 2.3%, from 2.7% a month prior. Initial jobless claims for the prior week rose by 22k to 264k, the highest reading since October 2021 and much higher than the expected 245k print.

The peak Fed Funds Rate rose 1bp to 5.08%. Following the broad softening in economic data, markets continue to expect no change in Fed policy rates with an 88% probability. Equity indices closed mixed with the S&P down 0.2% and Nasdaq up 0.2%. US IG and HY CDS spreads were wider by 0.5bp and 4.8bp respectively.

European equity markets ended mixed. European main and crossover CDS spreads were flat. Asia ex-Japan CDS spreads tightened by 1.9bp. Asian equity markets have opened broadly in the red today.

bond investor-4.2 1200x628 (1)

New Bond Issues

  • Mamoura $1.5bn 10.5Y/30Y at FPG T+105/115bp; books over $18bn

New Bond Issues 12 May 23

AT&T raised €3.25bn in a three-tranche deal. It raised:

  • €1bn via a long 2Y bond at a yield of 3.604%, 25bp inside initial guidance of MS+65bp area. The new bonds were priced at a new issue premium of 7.4bp to its existing 3.5% 2025s that yield 3.53%.
  • €1bn via a 8Y bond at a yield of 3.968%, 30bp inside initial guidance of MS+140bp area.
  • €1.25bn via a long 11Y bond at a yield of 4.311%, 30bp inside initial guidance of MS+170bp area.

The bonds have expected ratings of Baa2/BBB/BBB+. Proceeds will be used for general corporate purposes, which may include debt repayment.


New Bonds Pipeline

  • EDF hires for $ bond
  • BGK hires for $ 10Y bond
  • Korea Credit Guarantee Fund hires for $ 3Y Social bond
  • GS Caltex hires for bond


Rating Changes

  • Moody’s upgrades EDP to Baa2; stable outlook
  • U.S. Bancorp Downgraded To ‘A’ From ‘A+’ On Narrower Outperformance Versus Peers; Outlook Stable
  • MGM Resorts International Outlook Revised To Stable From Negative; Stronger Macao Recovery, Faster Leverage Improvement
  • Fitch Downgrades Oriflame to ‘B-‘; Maintains Negative Outlook

Term of the Day

Final Price Guidance

Final price guidance (FPG) refers to a stage of a new bond issuance that is after the initial price guidance (IPG), but before the final pricing. At the FPG stage, the yield is generally lower or tighter than the initial proposed yield. In some cases, final pricing may be lower than the FPG stage if investor demand allows for further tightening.

Talking Heads

On Overbought Pemex Bonds Face Waning Mexico Support – PIMCO

“This administration was perhaps the most pro-Pemex administration you would likely be able to get… After the election then it raises very, very meaningful concerns to investors”

On Private credit may outperform public bonds as defaults rise

Higher quality borrowers that may otherwise have issued debt in the public markets are seeking financing in private markets, attracted by certainty and speed of completing these transactions…  project private debt to outperform public credit as more borrowers struggle to repay their obligations, owing to “selective sourcing, robust diligence, enhanced structure, direct access to the borrower and financials, and the ability to influence workout situations to maximize recovery value.”

On Italian bonds facing a raft of challenges as credit ratings loom

Michael Weidner, head of European fixed income at Lazard Asset Management

“We don’t expect a downgrade, but it’s certainly a close call… We’re not too bullish on Italy. The spread is a bit too tight… I’m more concerned about broader political implications over the summer”

On Corporate bond ETFs returning to favor

Karim Chedid, head of investment strategy for BlackRock iShares EMEA

“A lot of credit exposures saw more buying, so the asset mix shifted [from a safe haven play]… US investors definitely have more of an international focus, buying more Europe, emerging markets everything”

Todd Rosenbluth, head of research at consultancy VettaFi

In April, US investors were more willing to take on credit risk using fixed income ETFs due to greater confidence in the global economy”


Top Gainers & Losers – 12-May-23*

BondEvalue Gainer Losers 12 May 23

Other News

Hindenburg shorts Icahn Enterprises bonds as battle with billionaire heats up

Thailand’s Kasikornbank halts plans to sell asset management stake

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