US initial jobless claims were in-line with estimates, at 385k in the week ending July 31, lower than 399k in the previous week. The layoffs dropped to their lowest level in more than 21 years last month amid a labor shortage. The Bank of England upheld its monetary policy and maintained the quantitative easing program at £895bn ($1.25tn) but raised concerns on near term inflation.
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New Bond Issues
Gemdale Corp raised $480mn via a 3Y green bond at a yield of 5%, a solid 60bp inside initial guidance of 5.6% area. The bonds have expected ratings of Ba3 and received orders over $1.5bn, 3.1x issue size. Asian investors took 96% of the bonds and EMEA 4%. Fund managers and asset managers received 65%, banks and financial institutions 34% and private banks and corporates 1%. The bonds are issued by Gemdale Ever Prosperity Investment, guaranteed by Famous Commercial (rated Ba3/BB–) and have the benefit of a keepwell deed and a deed of equity interest purchase undertaking from Gemdale Corp. Proceeds will be used for offshore debt refinancing.
Hangzhou Shangcheng District Urban Construction & Comprehensive Development raised $200mn via a 3Y bond at a yield of 2.25%, 50bp inside initial guidance of 2.75% area. The bonds have expected ratings of BBB- and received orders of over $2.1bn. The bonds are issued by wholly owned offshore subsidiary Zhejiang Baron (BVI) and guaranteed by the parent company. Proceeds will be used for debt refinancing.
New Bonds Pipeline
- HDFC Bank hires for $ AT1 Bond
- Perusahaan Pengelola Asset hires for $ bond
Rating Changes
- Wyndham Hotels & Resorts Inc. Upgraded To ‘BB+’ On Recovering Lodging Segment And Credit Measures; Outlook Stable
- Moody’s upgrades Olin’s unsecured notes to Ba2; outlook revised to positive
- Evergrande And Subsidiaries Downgraded To ‘CCC’ By S&P On Escalating Nonpayment Risk; Outlook Negative
- Fitch Revises Outlook on China Merchants Bank’s IDR to Positive; Upgrades VR to ‘bb+’
- Fitch Revises Tereos’s Outlook to Stable; Affirms IDR at ‘BB-‘
- Automaker BMW Outlook Revised To Stable By S&P On Stronger Margin And Cash Flow Prospects; Affirmed At ‘A’
- Fitch Removes Raizen from Negative Watch; Affirms IDR at ‘BBB’
- Fitch Revises China South City’s Outlook to Negative, Affirms IDR at ‘B’
- Banco General And Banco Nacional de Panama Outlook Revised To Negative By S&P On Same Action On Sovereign; Ratings Affirmed
- Embarq Corp. Senior Unsecured Debt Rating Put On CreditWatch Negative On By S&P Acquisition By Apollo Global Management Inc.
- Fitch Places MGM’s IDR on Rating Watch Negative Following MGP Sale Announcementto ‘bb-‘
- Fitch Upgrades Industrial Bank’s Long-Term IDR to ‘BBB’; Outlook Stable; Upgrades VR to ‘b+’
- Fitch Affirms CNCB’s Long-Term IDR at ‘BBB’; Outlook Stable; Upgrades VR to ‘bb-‘
- Fitch Affirms China Everbright Bank’s Long-Term IDR at ‘BBB’, Outlook Stable; VR Upgraded to ‘bb-‘
- Fitch Assigns McLaren Holdings Final ‘B-‘ IDR; Stable Outlook
- Europcar ‘CCC+’ Ratings Placed On CreditWatch Positive By S&P On Potential Acquisition By Volkswagen-Led Consortium
Term of the Day
Real Yields
Real yields refer to the yields or returns on a financial instrument after accounting for inflation. It is approximately calculated by deducting the annual inflation rate from the nominal yields. In an inflationary environment, the purchasing power of every dollar invested reduces by the annual inflation rate. This is why investors consider real yields to be an important metric since it indicates a more “real” indication of return compared to nominal yields. For example, US real yields are negative across all the real yield bond curve – the 10Y real yield is currently at -1.1%
Talking Heads
On Huarong investors bracing for long-awaited financial results
“The opportunity to find distressed-for-control or to buy good companies with bad balance sheets for pennies on the dollar is now more rare.” “This is a new era of investing whereby we believe investors need to be even more hands-on, structurally creative, and proactive in managing their portfolios.”
Top Gainers & Losers – 06-Aug-21*
