Wall Street ended the week on another high. S&P expanded its gains to squeeze out another record on Friday as it closed 0.2% higher while Nasdaq also gained 0.4%. Strategists say that the inflation witnessed in the US over the past two months is transitionary. Tech and Financials were 0.6% higher while Healthcare was down 0.7% as it reversed some of its earlier gains. US 10Y Treasury yields moved in a tight range to end at 1.46%. European stocks ended higher with DAX and CAC rallying 0.8% and FTSE gaining 0.7%. Spreads across witnessed another day of tightening – US IG and HY CDS tightened 0.6bp and 2.7bp respectively. EU main and crossover CDS also tightened by 0.8bp and 4.3bp respectively. In the Gulf, the Saudi TASI ended up 0.9% while UAE’s ADX was flat. In Latam, Brazil’s Bovespa was down 0.5%. Asian markets are flat with China and HK closed due to a holiday while Asia ex-Japan CDS spreads tightened 1.1bp.
New Bond Pipeline
- Wipro hires for $ 5Y Yankee
- Gajah Tunggal $ bond alongside tender offer
- Fitch Ratings Upgrades ALROSA to ‘BBB’; Outlook Stable
- Unigel Participacoes Upgraded To ‘BB-‘ From ‘B+’ And To ‘brAA+’ From ‘brAA’ By S&P On Stronger Cash Flows, Outlook Stable
- Weichai Power Co. Ltd. Upgraded To ‘BBB+’ By S&P On Improving Business Strength And Ample Financial Buffer; Outlook Stable
- Colombian Power Co. Termocandelaria Downgraded To ‘BB-‘ From ‘BB’ BY S&P On Weaker Expected Performance; Outlook Stable
- Fitch Revises Nicaragua’s Outlook to Stable; Affirms Foreign Currency IDR at ‘B-‘
- Fitch Revises SAN Mexico´s Outlook to Stable; Affirms IDR at BBB+
- Fitch Revises Outlook on Danske Bank to Stable; Affirms at ‘A’
The Week That Was
US primary market issuances rose to $33.4bn, up 56% vs. $21.3bn in the week prior. IG issuances were higher at $33.4bn vs. $16.4bn in the prior week while HY issuances were up to $7.2bn vs. $3.97bn in the prior week. The largest deals in the IG space were led by BofA’s $4.5bn and Goldman Sachs’ $4.3bn dual-tranchers. In the HY space, Sirius Radio’s $2bn and Ladder Capital’s $650mn led the table. In North America, there were a total of 79 upgrades and 25 downgrades combined across the three major rating agencies last week. LatAm saw $1.9bn of new bond deals vs. $4.3bn in the prior week. The issuances were led by Azul’s $600mn and StoneCo’s $500mn deals. EU Corporate G3 issuances saw a sharp rise last week to $34.5bn vs. $15bn in the week prior, led by Enel’s €3.25bn sustainability-linked triple trancher, Vonovia’s €3bn three-trancher and Natwest’s $1.23bn issuance. Across the European region, there were 33 upgrades and 21 downgrades across the three major rating agencies. GCC and Sukuk G3 issuances were at $9.15bn vs. neglible issuance in the week prior dominated by Aramco’s $6bn three-part debut Sukuk issuance followed by Oman’s $1.75 issuance and Emirates Development Bank’s $750mn issuance. Across the Middle East/Africa region, there was 1 upgrade and downgrade each across the three major rating agencies. APAC ex-Japan G3 issuances were at $5.8bn vs. $11.2bn in the prior week. Bank of New Zealand raised €1bn followed by AgBank of China’s $1bn dual-trancher, Pacific Century’s $700mn issuance, Hana Bank’s and China Everbright’s $600mn deals. In the Asia ex-Japan region, there were 6 upgrades and 5 downgrades combined across the three major rating agencies last week.
Term of the Day
Rising stars are companies that have recently seen credit rating upgrades that pull its rating to investment grade category from its previous junk or high yield category. They are termed as rising stars as their financial and/or operational metrics show an improving trend. Meat company JBS is among the latest rising stars as its senior unsecured bonds were upgraded by a notch to BBB-. The opposite of rising stars are fallen angels, which are issuers that have been recently downgraded to junk category from its previous investment grade rating category.