US equity markets fell on Friday with the S&P and Nasdaq down 0.3% and 1.3% each. Sectoral losses were led by IT and Consumer Discretionary, down over 1% each. US 10Y Treasury yields moved 12bp higher to 2.77%. European markets on the other hand were higher – the DAX, CAC and FTSE were up 1.5%, 1.3% and 1.6%. Brazil’s Bovespa ended 0.5% higher. In the Middle East, UAE’s ADX was up 1% on Friday and Saudi TASI was up 0.6% on Sunday. Asian markets have opened lower – Shanghai, HSI, STI and Nikkei were down 1.8%, 2.5%, 0.6% and 0.9% respectively. US IG CDS spreads widened 2.4bp and HY spreads were 12.4bp wider. EU Main CDS spreads were 0.1bp wider and Crossover CDS spreads were 5.7bp wider. Asia ex-Japan CDS spreads widened 0.3bp.
New Bond Issue
- Ascendas REIT S$ 7Y Green at 3.75% area
- MUFG $ 4NC3/6NC5/11NC10 at T+125-130/145-150/170-175bp
- Korea Mine Rehabilitation and Mineral Resources $ 5Y at T+160bp area
New Bonds Pipeline
- Bank of East Asia hires for $ Tier 2 bond
- Mirae Asset Securities hires for $ 3Y senior and/or 5Y sustainability-linked bond
- Towngas Smart Energy hires for $ 5Y/10Y SLB
- Citic Securities hires for $ 3Y and/or 5Y
- Yiwu State-owned Capital Operation hires for $ bond
- Korea Midland Power hires for $ bond
- Jubilant Pharma hires for $ bond
- Sael Limited hires for $ 7Y Green bond
- Kalyan Jewellers India hires for $ bond
Rating Changes
- Russia Foreign Currency Ratings Cut To ‘SD’, Local Currency Ratings Kept At ‘CC’; All Ratings Subsequently Withdrawn
- Guangzhou R&F Downgraded To ‘SD’ On Distressed Debt Extension; R&F (HK) Affirmed At ‘CC’ With Negative Outlook
- Fitch Downgrades Oriflame to ‘B’; Outlook Negative
- Ukraine-Based Kernel Holding Downgraded To ‘SD’ On Postponement Of Bank Loan Repayments; Issue Ratings On Notes To ‘CC’
Term of the Day
Moratorium
A moratorium is a temporary suspension on debt wherein the borrower does not have to make any repayments. It is a waiting period with some protections for the borrower before repayments begin. However, the interest is accumulated until the end of the moratorium period and the accrued interest is then added to the principal amount of the debt.
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Talking Heads
On Wall Street Banks Weigh Bond Sales in Race to Beat Rising Rates
Ken Monaghan, co-head of high-yield at Amundi
Data is “likely to reinforce the perception that inflation is endemic, the Fed will need to continue to tighten the screws and that will lead to an eventual recession. If the Fed was an airline pilot, given its history it would be sent back to the aircraft simulators for its inability to execute a soft landing.”
On The Part of the U.S. Bond Market Where 0% Is High and Alarming
Michael Cloherty, head of US rates strategy at the securities arm of UBS AG
“The Fed going to tighter policy should fundamentally argue for higher real yields”
David Bianco, chief investment officer, Americas for DWS
“A real yield above zero means valuations for equities and all assets require re-assessing.” Fed officials “sound very convincing about fighting runaway inflation, and they are going to act.”
George Goncalves, head of macro strategy at MUFG
“The Fed became a major buyer of TIPS, and now they are not buyingOn the margin, QT matters more for TIPS than the broader Treasury market.”
On Russia’s First Default in a Century Looks All But Inevitable Now
Russian Finance Minister Anton Siluanov
“Western countries are trying in every possible way to make Russia declare default
Lutz Roehmeyer, CIO at Berlin-based Capitulum Asset Management
“If Russia does not manage to organize a payment route to bondholders within the grace period and no dollars arrive into the accounts, then it is a default, the CDS will trigger”
On Threat of President Le Pen Sends French Bond Yields to 2015 High
Jordan Rochester, a strategist at Nomura International Plc
Le Pen “is more palatable for markets this time, as leaving the euro area does not feature in her campaign. That is where the good news ends.”
Rishi Mishra, an analyst at Futures First
Unless Le Pen comes out swearing her loyalty to the euro, the risk is that her victory creates anti-euro sentiment and ushers in a new era of uncertainty… Italian bonds may suffer the most should she actually win”
Top Gainers & Losers – 11-Apr-22*
