US CPI jumped 5.4% YoY in September, with the Core CPI up 4% YoY with food, rents and motor vehicle costs accounting for a bulk of the increase. The Federal Reserve’s September meeting minutes reinforced expectations for a tapering announcement at the next policy meeting in November.
New Bond Issues
Nanjing Jiangning Economic and Technological Development raised $210mn via a 364-day bond at a yield of 2.9%, same as initial guidance. The bonds have expected ratings of BBB (Fitch). The bonds will be issued by Jiangning Jingkai Overseas Investment. Nanjing Jiangning Economic and Technological Development Group has provided a keepwell.
New Bonds Pipeline
- Sumitomo Mitsui Trust Bank hires for € 7Y bond
- China plans for $ 4bn 3/5/10/30Y bond
Fitch Upgrades Ukreximbank’s VR to ‘b-‘; Affirms IDR at ‘B’/Positive
- Moody’s downgrades Sinic to Ca; outlook negative
- Greenland Holding Downgraded To ‘B+’, Greenland HK To ‘B’ On Impaired Funding, Weak Operating Conditions; Outlook Neg
- E-House Downgraded To ‘B’ On Tough Operating Conditions And Tightening Liquidity; Outlook Negative
- Melco Resorts And Studio City Downgraded On Slow Recovery In Macau’s Gaming Revenue; Outlook Negative
- Wynn Resorts Ltd. Ratings Lowered On Slow Recovery In Macau’s Gaming Revenue, Removed From CreditWatch; Outlook Negative
Fitch Revises Outlook on Australia to Stable; Affirms at ‘AAA’
- Moody’s changes ConocoPhillips’ rating outlook to positive, affirms A3 rating
Term of the Day
A put option gives the buyer of the option the right but not the obligation to sell the underlying instrument at a particular price known as the strike price at expiration. Put options in bonds are in the hands of the bondholders unlike call options, which lie with the issuer. Exercising a put would require the issuer to redeem the bonds at the predefined price on the put date, leading to a cash outflow.
“The minutes make it clear that the Fed will announce tapering at the next FOMC meeting, on Nov. 2-3, unless disaster strikes.”
On the view that rates will remain at ultra-low levels for the long-term despite higher year-end yield forecasts – Steven Major, Global Head of Fixed Income Research at HSBC
“With end-2021 in sight, growth expectations are lower, and inflation expectations are in the driving seat,” Major said. “But our forecast and our methodology are very much looking at the longer-term drivers. There’s a difference between predicting climate change and a weather forecast.” “I understand people are concerned about inflation, and I’m not being dismissive about it.” “But I just think that what drives the current narratives is not going to change our longer-term outlook. Something temporary should not change one’s fundamental view. We will only change our view on this if we can put together a constructive piece of work that shows all the central bank’s models are wrong.”
On the legal options for Evergrande’s offshore creditors
Matthew Chow at S&P Global Ratings
“Evergrande is almost like a quasi-sovereign debt restructuring in that the significant stakeholders and the authorities are no doubt dictating what should be done, although with the sponsor still in place,” he said. “The hand of the government and authorities is never far away.”
On the comment that Argentina wants to tie up with International Monetary Fund as soon as conditions allow
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