New Bond Issues
- Tuan Sing S$ 3NC2 at 6.9% final
Guangdong Hong Kong Greater Bay Area Holdings (GD-HKGBA) raised $41.5mn via a 2Y bond at a yield of 15.012%. The bonds have expected ratings of B– (Fitch). It also raised $235.72mn under an exchange offer for its 14% 2021 notes which were trading at 100.03 and yielding 25.94%, bringing the total size of the new bonds to $277.22mn.
Taizhou Hailing City Development Group raised $33mn via a 364-day bond at a yield of 2%, unchanged from initial guidance. The bonds are unrated. The bonds are issued by Taizhou Haiminghui Trading, guaranteed by Taizhou Hailing City Development Group and supported by a letter of credit from Bank of Shanghai Nanjing branch.
Yibin Emerging Industry Investment raised $97mn via a 35-month bond at a yield of 2.6%, 20bp inside initial guidance of 2.8% area. The bonds are unrated. The bonds are supported by a letter of credit from Chengdu Rural Commercial Bank. The issuer provides investment management services. Its parent company is Yibin State-owned Assets Management, which is wholly owned by the Yibin SASAC and is the main asset management and investment entity for the Yibin municipal government in China’s Sichuan province.
New Bonds Pipeline
- Kookmin Bank hires for € 5Y green bond
- Zhuji State-owned Assets Management hires for $ bond
- Dongfeng Motor Group hires for € 3/5Y bond
- Nanjing Jiangning Economic and Technological Development hires for $ bond
- KEB Hana Bank hires for $ PerpNC5 sustainability AT1 bond
- China plans for $4bn 3/5/10/30Y bond
- Saigon-Hanoi Bank hires for $ bond
- Burgan Bank hires for $500mn 6NC5 bond
- Kexim hires for $/€ bond
Rating Changes
- Moody’s upgrades Kutxabank’s deposit ratings to Baa1; outlook changed to positive
- Fitch Downgrades Xinyuan to ‘C’ on Distressed Debt Exchange
- Moody’s downgrades Solomon Islands’ rating to Caa1, maintains stable outlook
Term of the Day
Red-Chip Companies
Red-Chip companies are Chinese companies that are incorporated outside mainland China and listed on the Hong Kong Stock Exchange. These companies are substantially owned, directly or indirectly, by mainland China state entities with over 55% of its revenue or assets derived from China.
Talking Heads
On the view that Congress will raise debt ceiling – Janet Yellen, US Treasury Secretary
“Once Congress and the administration have decided on spending plans and tax plans, it’s simply their responsibility to pay the bills that result from that.” “It’s a housekeeping chore. Because really, we should be debating the government’s fiscal policy.” “I don’t believe any president has ever had to make a decision about what they would do if Congress failed to raise the debt ceiling. I can’t imagine our being there on December 3rd.” “There is a trade-off there. We know that programs that are universal have tended to be long-lasting and very popular,” Yellen said. “But there is also an argument for, you know, making sure that the highest income Americans perhaps don’t get the benefit of a program that is most needed by those with lower income.”
On the view that markets are right to price in quicker tightening
Michael Saunders, a member of the Bank of England’s Monetary Policy Committee
“I think it is appropriate that the markets have moved to pricing a significantly earlier path of tightening than they did previously,” said Saunders.
On Evergrande contagion likely to trigger wave of defaults for developers
Michel Lowy, chief executive officer of SC Lowy
“Ultimately it’s a liquidity game,” said Lowy. “How many months can you survive until at some point the central government will relent and start releasing liquidity pressures on developers?”
Hao Hong, head of research and chief strategist at BoCom International
“It’s very difficult to see a solution right now,” China’s Evergrande strategy would be to “let as many people bear the cost as possible,” Hong said.
“There’s no interest to bail him out.” “In the situation he’s in now, I don’t think any political connections will come to his rescue.”
On BlackRock US bond ETFs hit by large outflows as sector booms
“We are on track for potentially another record breaking year, breaking 2020’s net inflows record, but the heavyweight products from BlackRock have not been the driver.” “The BlackRock products tend to be used more by institutional investors. Retail and wealth management are often using the Vanguard products. Maybe institutional investors are investing less whereas retail investors are holding steady,” Rosenbluth said.
“These funds’ flows are notoriously fickle.” “They’re likely to be used by traders looking for liquidity or short-term exposure to a particular corner of the bond market, and less likely to be used by long-term allocators.”
“Vanguard has an ethos of being the low-cost provider. For many, as they move to ETFs, even from within Vanguard’s mutual fund products, that has been a driver of net inflows for them and they get significant income from financial advisers,” said Fuhr.
“Our clients, from retirement savers to institutional investors, turn to iShares for a combination of value and liquidity that helps them to quickly and efficiently transfer risk, reposition portfolios or implement hedges.” “iShares ETFs are a diverse offering of trading and allocation tools to enable critical versatility when navigating a wide range of market environments.”
Top Gainers & Losers – 11-Oct-21*
