US markets closed mixed even as nonfarm payrolls beat estimates – the S&P inched up 0.2% creating another record while Nasdaq ended 0.4% lower. Financials and Materials, up 2% and 1.5% pushed the markets higher while Consumer Discretionary, down 0.7% dragged the index. European markets also inched higher hovering at record levels – CAC and DAX were up 0.5% and 0.1% respectively while the FTSE was flat. Saudi’s TASI and UAE’s ADX were up 0.1% and 1.1% respectively. Brazil’s Bovespa gained 1%. APAC stocks had a muted start to the week – Nikkei was up 0.3% while Shanghai was flat. Singapore markets are closed as the city state celebrates its national day today. US 10Y Treasury yields rose another 6bp to 1.3%, rising over 10bps since Thursday boosted by a better than expected jobs report which alleviated fears of the Delta variant. US IG CDS spreads tightened 0.6bp and HY tightened 2.1bp. EU Main CDS spreads tightened 0.3bp and Crossover spreads tightened 2.4bp. Asia ex-Japan CDS spreads were flat.

US NFP data saw a sharp pick-up to 943k in July beating expectations of 870k. The unemployment rate also fell to 5.4% in July from 5.9% in June. The number of unemployed fell by 782k to 8.7mn. Leisure and hospitality, local government education and profession and business services contributed to the higher jobs. Meanwhile, German Industrial Production was down -1.3% against an expectation of a rise of 0.5%, seeing its third consecutive month of contraction.

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New Bond Issues

  •  Zhejiang Deqing Jinkai Urban Development $ 3Y credit-enhanced bond at 2.2% area

New Bond Issues 9 Aug

New Bonds Pipeline

  • HDFC Bank hires for $ AT1 Bond
  • Perusahaan Pengelola Asset hires for $ bond


Rating Changes

Term of the Day


Spin-offs are a corporate re-organization strategy used by a company to create a new subsidiary from its parent company. The parent separates (spins-out) part of its business into a second publicly-traded entity and distributes shares of the new entity to its current shareholders. Spin-offs come in different types like pure play spin-offs, equity carve outs etc. China’s Shui On Land Ltd. is considering a spin-off of its commercial assets.

Talking Heads

“I would be supportive of adjusting these purchases soon, but once we start the adjustment process, I would probably prefer to have it be more gradual,” Kaplan said. “We’re obviously having disagreements, but I think that’s healthy.” “I’m much more comfortable where we are right now than where we were a couple of months ago.” “Adjusting these purchases sooner might actually allow us to be more patient on the fed funds rate down the road.” “That supply-demand imbalance regarding labor is going to be more persistent than people might expect.”

On the opportunity in quasi-sovereign bonds as investors seek higher returns

Sara Grut, a senior strategist at Goldman Sachs

“Quasis are often a high-beta version of the sovereign.” “If you like sovereigns for the carry, it makes sense to look at some of the quasis.”
Omotunde Lawal, head of emerging-market corporate debt at Barings
“You get even more comfort from the fact that it’s government-owned and very strategic to the Mexican government,” Lawal said. “It’s really about looking at it as a spread over the sovereign.”
In a report by S&P analysts led by Matthew Chow
“Evergrande’s liquidity position is eroding more quickly and by more than we previously expected.” “The company’s nonpayment risk is escalating, not only for the substantial public bond maturities in 2022 but also for its bank and trust loans and other debt liabilities over the next 12 months.” “The steadily increasing number of asset freezes signals strained liquidity.” “Evergrande’s access to funding from financial institutions is more significantly constrained than expected. As news reports continue to be negative, the company could experience a considerable ‘downward spiral,’ with lenders potentially further tightening their risk exposure to the company.”
Eddie Chia, portfolio manager at China Life Franklin
“Evergrande is just moving into a vicious cycle.” “It is suffering from negative feedback loop of negative news.”
“We have continued to see an expansion of the greenium in the secondary market in the second quarter in most of the markets.” “It’s a bit too early to say what the premium is on SLBs, but from what we’re seeing so far, it looks smaller than green bonds. Looking at Enel, it seems that the greenium or premium attached to the SLB is lower than it is for the green bonds so far,” Cuilliere said.

“The E and G [of ESG] are fairly clear cut.” “When it gets to the S, that’s the Wild West, there’s no consensus.” “Investors are routinely applying double standards… by invoking a home-made version of international law based on emotion and politics”.


Top Gainers & Losers 09-Aug-21*

BondEvalue Gainer Losers 9 Aug

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