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Missed the Bond Traders’ Masterclass sessions this week? Join us for the upcoming sessions at 6pm SG/HK from the 31st of March starting with Bond Portfolio Optimization & Risk in Perpetual Bonds.
CAR Inc raised $250mn via a 3Y non-call 2Y (3NC2) senior bond at a yield of 10%, 25bp inside initial price guidance of 10.25% area. The bonds have expected ratings of Caa1/B- and received orders over $445mn, 1.8x issue size. S&P, which rates CAR at CCC+ said it could upgrade the issuer rating to B- if the issue is successful. Proceeds will be used to repay debt and for general corporate purposes.
Nomura cancelled a $3.25bn bond issuance on account of a potential loss of ~$2bn in its US subsidiary with a US client. The Japanese lender said that it would consider issuing the bond once the financial results of this are known.
US primary market issuances rose to $41.8bn, up 27% vs. $33.1bn the week prior. The rise in issuance can be attributed mainly to IG deals at $28.1bn, up 38% WoW while HY fell 17% WoW to $10.5bn. The largest deal in the IG space was Oracle’s $15bn six-part issuance and in the HY space, cruise operator Royal Caribbean and NFE led the tables with a $1.5bn issue each. In North America, there were a total of 49 upgrades and 41 downgrades combined, across the three major rating agencies last week. LatAm saw $1.9bn of deals last week vs. a mere $178mn in the week prior led by Banco de Credito Peru raising $500mn and Trust Fibra Uno raising $300mn. EU Corporate G3 issuance saw an increase again last week to $41.2bn vs $32.3bn in the week prior – ING’s €5bn ($5.9bn) deal was the largest, followed by UBS’s combined $3.7bn dual currency offering (EUR and GBP) in three parts and Santander’s $2.25bn dual-trancher. GCC and Sukuk G3 issuances were at $1bn with Kuwait’s Boubyan bank and Doha Finance raising $500mn each in the week prior. APAC ex-Japan G3 issuances were relatively lower at $6.2bn vs $7.7bn in the prior week. Greenko’s $940mn was the largest deal – it was also the largest ESG deal yet from India. Other large deals were MGM’s $750mn 5.8NC2.8 bond and GLP China’s $700mn 5Y. In the Asia ex-Japan region, there were 6 upgrades and 6 downgrades combined, across the three major rating agencies last week.
Tobin’s Q aka Q-Ratio is calculated as the market value of the company divided by the replacement cost of its assets. Since replacement costs are difficult to calculate, a commonly used metric is the book value of assets or adjusted networth of the company. The ratio was made by Nobel laureate James Tobin, who suggested that the combined market value of all companies on the stock market should be about equal to their replacement costs. A ratio of less than 1 would indicate asset book values exceeding their market value, thus making the company undervalued. Bloomberg in a story noted that the ratio is currently at its highest since 2000.
On bubble deniers abound to dismiss valuation metrics one by one