S&P and Nasdaq rallied 1.1% and 1.4% on Friday as equities recovered some its losses from earlier in the week. US Markit Flash Manufacturing PMI came in at 60.6, the highest since 2007. US 10Y Treasury yields were stable at 1.56%. This week sees popular names like Tesla, Apple, Google etc. report earnings besides the FOMC’s meeting on Wednesday European equities were weaker with the DAX and CAC down 0.3% and 0.2% respectively while FTSE was unchanged. US IG CDS spreads tightened 0.9bp while HY tightened 4.7bp. EU main CDS spreads were 0.5bp tighter and crossover spreads tightened 3.5bp. Asian equity markets are up 0.7% today and Asia ex-Japan CDS spreads flattened 0.1bp.
New Bond Issues
- Maldives tap of $ 9.875% sukuk 2023s, final at 10.5%
- Incheon Int’l Airport $ 5Y green bond at T+85bp area; books over $1bn
- NBN $ 5Y and 10Y at T+90bp and 130bp areas
New Bond Pipeline
- Shanxi Securities $ bonds
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China Water Affairs Group $ green bond
- Hyundai Motor Manufacturing Indonesia $ bonds
Rating Changes
- Greece Upgraded To ‘BB’ On Improved Governance Effectiveness By S&P; Outlook Positive
- Allied Universal Upgraded To ‘B’ By S&P On Improved Competitive Positioning, Scale On Acquisition Of G4S; Outlook Stable
- Fitch Downgrades Alpha Holding’s Ratings to ‘CC’
- Alpha Holding Ratings Cut To ‘CCC’ By S&P On Weaker Governance Practices Hitting Solvency And Business Confidence; On Watch Neg
- GLP And GLP China Ratings Lowered To ‘BBB-‘ By S&P, Outlook Stable; ‘BBB-‘ Issue Rating Affirmed
- Moody’s downgrades Botswana’s ratings to A3, changes outlook to stable
- Moody’s affirms Macrotech Developers’ Caa1 rating; changes outlook to positive
- Moody’s downgrades Codere’s CFR to Ca and assigns Caa1 to the new bridge notes; outlook changed to negative
- Moody’s downgrades Bank ZENIT’s deposit ratings to B1, stable outlook
- Fitch Ratings Affirms Goldman Sachs Group at ‘A/F1’; Outlook Revised to Stable
- NOVA Chemicals Corp. Outlook Revised To Stable From Negative By S&P On Improving Credit Measures; ‘BB-‘ Rating Affirmed
- U.S. Steel Corp. Outlook Revised To Positive By S&P On Improving Debt Leverage; ‘B-‘ Issuer Credit Rating Affirmed
- Automaker Daimler Outlook Revised To Positive From Stable By S&P On Improved Cash Flow Prospects; ‘BBB+/A-2’ Ratings Affirmed
- Ratings And Outlooks On Various Taiwanese Financial Institutions Revised By S&P Following Taiwan Upgrade
- China Merchants Bank Outlook Revised To Positive By S&P; ‘BBB+/A-2’ Ratings Affirmed
The Week That Was
US primary market issuances fell to $27.7bn, down 44% vs. $49.7bn in the week prior. The drop in issuance can be attributed primarily to IG at $18.3bn vs. $37.8bn in the prior week. HY issuances were at $9bn slightly lower vs. $11.5bn in the prior week. The largest deals in the IG space were led by Morgan Stanley’s $7.5bn three-trancher followed by P&G’s $2bn issuance. In the HY space, Jazz Securities led the table raising $1.5bn followed by Ally Financial’s $1.35bn issuance. In North America, there were a total of 57 upgrades and 11 downgrades combined across the three major rating agencies last week. LatAm saw $4.2bn in new bond deals last week vs. $1.1bn in the week prior with the Colombia sovereign alone raising $3bn. EU Corporate G3 issuance saw a slight increase in issuance last week to $28.4bn vs. $24.2bn in the week prior led by ING’s $11bn deal. Across the European region, there were 47 upgrades and 24 downgrades across the three major rating agencies. GCC and Sukuk G3 issuances were at $2.3bn vs. just $660mn in the week prior led by TAQA’s $1.5bn two-part offering, followed by Equate Petrochemical’s $700mn deal. Across the Africa/Middle East region, there were 2 upgrades and 5 downgrades across the three major rating agencies. APAC ex-Japan G3 issuances increased to $18.3bn vs. $10.8bn in the prior week led by TSMC’s $3.5bn three-trancher and Petronas’ $3bn two-trancher. Last week also saw new bonds from sovereigns with Philippines’ €1.3bn issuance and Malaysia’s debut $1.3bn sustainability Sukuk deal. In the Asia ex-Japan region, there were 20 upgrades and 6 downgrades combined across the three major rating agencies last week.
Term of the Day
REIT
REIT or Real Estate Investment Trusts are companies that own or finance real estate assets that generate an income. These real estate companies have to meet several requirements to be eligible to be a REIT like paying 90% of their income to its holders. REITs often trade on stock exchanges, and they offer a number of benefits to investors. It allows investors to invest in a range of real estate portfolios without the hassles of managing actual real estate. Another benefit is that REITs allow smaller investors exposure to real estate without the requirement of a large investment sum, which is required for direct real estate investments.
There are different types of REITs ranging from residential, commercial and mortgage to retail (mall REITs etc.), industrial and others. The companies managing the REIT essentially lease out space and collect rental payments thereby generating income. This income is then passed on to the shareholders of the REIT. Most REITs are required to payout 90% of its income to holders to qualify as a REIT. Singapore’s CapitaLand was a pioneer of REITs and business trusts in Singapore.
Talking Heads
On big oil companies finally generating spare cash, but investors not likely to get any
Christyan Malek, JPMorgan Chase & Co.’s head of EMEA oil and gas
“Exxon’s board needs an overhaul,” said DiNapoli. “We continue to be deeply concerned about Exxon’s failure to manage climate risk and refusal to heed calls to transition to a lower carbon future.”
Top Gainers & Losers – 26-Apr-21*
