US equity markets ended lower on Tuesday with the S&P and Nasdaq down over 0.9% each. Sectoral losses were led by Energy, down 2% and Information technology falling 1.3%. US 10Y Treasury yields were 2bp up to 2.98%. European markets were higher with the DAX, CAC and FTSE up 0.6%, 0.8% and 0.2% respectively. Brazil’s Bovespa was flat. In the Middle East, UAE’s ADX and Saudi TASI gained 0.1% and 0.6% respectively. Asian markets opened mixed – Shanghai, HSI and Nikkei were up 0.4%, 0.8% and 0.3% respectively while STI was down 0.6%. US IG CDS spreads widened 0.3bp and US HY spreads were wider by 4.6bp. EU Main CDS spreads were 1.1bp wider and Crossover spreads were wider by 8bp. Asia ex-Japan IG CDS spreads widened 10.6bp.

South Korea’s central bank hiked its benchmark rate by 50bp to 2.25%, in-line with expectations. The central bank raised rates to tame inflation which has accelerated to its fastest in 24-years.

Corporate Debt Restructuring Masterclass

Not sure what to expect in a Corporate Debt Restructuring?

Sign up for the upcoming masterclass, which will be conducted live via Zoom on 18 July 2022. The session will cover:

  • In-court vs. Out-of-court restructurings
  • Out-of-court debt restructuring techniques
  • Understanding Chapter 11 bankruptcy
  • Cross-border insolvencies with a focus on China
  • Key considerations for a corporate debt restructuring
  • Case studies of recent restructurings from Asia Pacific, including a deep-dive into the recent consent solicitation and schemes transacted by Chinese property developers including Guangzhou R&F Properties

New Bond Issues

  • Fujian Zhanglong Group $ Short 3Y Green @ 5.3% area

New Bond Issues 13 Jul 22

Deutsche Bank NY raised $1.3bn via a 4NC3 bond at a yield of 6.119%, 20bp inside initial guidance of T+325bp area. The senior preferred bonds have expected ratings of Baa2/BBB-. Proceeds will be used for general corporate purposes. The new bonds were priced 143.9bp wider to its existing non-callable senior preferred 1.686% 2026s that yield 4.68%.


New Bonds Pipeline

  • Asian Development Bank (ADB) hires for € 10Y bond
  • Busan Bank hires for $ Social bond
  • Continuum Energy Aura hires for $ Green Bond


Rating Change


Term of the Day

Technical Default

A technical default is a non-compliance with technical requirements or covenants in the bond’s offer document or credit agreements. This need not have anything to do with missing a scheduled payment but have more to do with breaching specified conditions. These could include not adhering to negative covenants which require not to dispose of any assets, changing the nature of business, delaying results etc. Thus, a technical default need not have to deal with missing a payment and may still result in a full repayment.

Analysts note that Evergrande is grappling with $300bn in liabilities and trying to extend local bond payment timelines to avoid technical defaults. This comes after its onshore unit Hengda Real Estate failed to get consent to delay its local bond payment.


Talking Heads

On Fed’s Barkin Open to Raising Rates by 50 or 75 Basis Points in July

“I am one of the guys who like the option value of deciding the week of the meeting as opposed to two weeks before the meeting. But I thought Jay’s guidance the last time was very sound. We’ll get a little bit more information before the meeting and importantly we’ll get CPI. I’ll reserve judgment… We want to get back to somewhere in the range of neutral as expeditiously as we can”.

On IMF Chief Warning of Debt Crisis as Higher Rates Follow Covid, War

“What we see now is a crisis upon a crisis, and possibly a third shock of tightening of financial conditions to come after the pandemic and on top of the war.”

On BOE’s Bailey Saying his Goal Is to Curb Inflation, ‘No Ifs or Buts’

“We want people to see that there are more options on the table than another 25 basis points… Bringing inflation back down to the 2% target sustainably is our job, no ifs or buts”

On ECB’s Nagel says bond spreads are fair until proven otherwise

“The financial markets are now making a greater differentiation between different risks due to the changed monetary policy outlook. I assume that these price developments are fundamentally justified, as long as there is no evidence to the contrary.”

On German Investor Confidence Sinks to Worst Since Debt Crisis – ZEW President Achim Wambach

“The current major concerns about the energy supply in Germany, the ECB’s announced interest rate hike and further pandemic-related restrictions in China have led to a considerable deterioration in the economic outlook”


Top Gainers & Losers – 13-July-22*

BondEvalue Gainer Losers 13 Jul 22

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