Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers

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• Azure Power $ amortizing 5NC2 green bond at 4% area

• Zhuhai Huafa Group $ PerpNC3 at 4.5% area

• Sichuan Development Holding $ 5Y bond at 3.3% area

• Yibin Emerging Industry Investment $ 35-month SBLC notes at 2.4% area

HSBC raised $3.5bn via a two-trancher. It raised $1.5bn via a 3Y non-call 2Y (3NC2) bond at a yield of 0.732%, 20bp inside initial guidance of T+70bp area. It also raised $2bn via an 8NC7 bond at a yield of 2.206%, 22bp inside initial guidance of T+130bp area. The SEC-registered bonds have expected ratings of A3/A-/A+. Coupons are fixed until the call dates and if not called, resets to SOFR + the initial margins on both the bonds on a quarterly basis. Proceeds will be used for general corporate purposes.

StanChart raised $1.5bn via a PerpNC7 AT1 bond at a yield of 4.3%, 45bp inside initial guidance of 4.75% area. The bonds have expected ratings of Ba1/BB-/BBB-. Coupons are fixed until the first reset date of February 19, 2029, and if not called, resets then and every five years thereafter to the 5Y US treasury yield + 313.5bp. Proceeds will be used for general business purposes of the group, including, without limitation, to repurchase or refinance existing debt, including a tender offer, and to strengthen further the regulatory capital of the group. The bonds were priced 43bp wider to HSBC’s 6.5% Perp (Baa3/BBB) callable in March 2028, that yield 3.97%

Temasek raised S$1.5bn ($1.1bn) via a 50Y bond at a yield of 2.8%, 5bp inside initial guidance of 2.85% area. The bonds are rated Aaa/AAA and received orders over S$1.7bn, 1.1x issue size. Insurance companies took 88% fund managers/agencies 10% and others 2%. By region, Singapore took 98% of the bonds and 2% went to others. The issuer is Temasek Financial I and guaranteed by the parent company. The issuer intends to provide the net proceeds from the issuance of what it calls ‘T2071-SGD Temasek Bond’ to Temasek and its investment holding companies to fund their ordinary course of business.

Taiyuan Longcheng Development Investment Group raised $77mn via a 364-day note at a yield of 2.2%, 55bp inside initial guidance of 2.75% area. The notes are unrated. Proceeds will be used for general corporate purposes. The issuer is 100% owned by the Taiyuan municipal finance bureau.

Shangrao Innovation Development raised $96mn via a 35-month credit-enhanced bond at a yield of 4%, unchanged from initial guidance. The bonds are unrated and have the support of an irrevocable standby letter of credit provided by Bank of Jiujiang. Proceeds will be used for industrial park construction.

 

“Risks remain. While inflation data has so far not been a major market mover, Wednesday’s July consumer price index release has the potential to cause volatility, especially given expectations that inflation has passed the peak.”

“First, deal reception in the high yield market took an appreciable step backward yesterday. While new issue concessions were all over the board, some of yesterday’s high yield deals came with concessions upwards of 20bp.” “Second, on the anecdotal side, reports of investor fatigue are coming in with increasing regularity as lightly staffed credit teams are overwhelmed by the sheer deal volume coming to market. This suggests the possibility of market saturation that could further exacerbate the recent technically driven widening.”

Seema Shah, chief strategist at Principal Global Investor

“For risk assets it’s not so much the level of yields that matters, but how quickly they rise,” she said.

Antoine Bouvet, senior rates strategist at ING
“Getting to 2 per cent from here would be a pretty sharp adjustment.” “There’s a feedback effect which means risk assets will be hit and some money will flow back into Treasuries. It’s a natural brake on rising yields.”