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US Treasury yields were stable across the curve on Monday. US new-home sales unexpectedly fell in February for the first time in three months, by 0.3% MoM, below estimates of a 2.1% rise by Bloomberg, and previous data of a 1.5% rise. Credit markets saw the US IG CDS spread widen 0.3bp and the HY spread widen 1.5bp. Looking at equity indices, S&P and Nasdaq ended lower by 0.3% each.
European equity indices closed mixed. European IG CDS spreads tightened 0.6bp and HY spreads were 4.9bp tighter. Asian equity markets have opened weaker today. Asia ex-Japan IG CDS spreads were 2.4bp wider. Singapore’s February core inflation accelerated to its fastest pace in seven months, coming in at 3.6% in February from a year earlier. This was also higher than the 3.1% seen in January, and Bloomberg’s estimates of 3.4%. This was driven by higher services and food inflation, partly reflecting seasonal effects associated with the Lunar New Year.
Korea National Oil Company (KNOC) raised $1.4bn via a three-part deal. It raised:
The notes are rated Aa2/AA, and proceeds will be used for general corporate purposes.
Deutsche Bank Frankfurt raised S$400mn via a 4NC3 senior non-preferred bond at a yield of 4.40%, 30bp inside initial guidance of 4.70%. The new bonds are priced 29bp tighter to its existing 5% bond due September 2026 (callable in September 2025) that currently yields 4.69%. The notes are rated Baa1/BBB/A-, and proceeds will be used for general corporate purposes.
MGM Resorts priced $750mn via a 8NC3 bond at a yield 6.5%, roughly in-line with initial guidance 6.5%. The senior unsecured bonds are rated B1/BB-/BB-. Proceeds will be used to repay existing debt, including its outstanding 6.75% 2025s. Any remainder may be invested in short-term interest bearing accounts, securities or similar investments.
BMW raised $3.25bn via a five-part deal.
The bonds are rated A2/A. Proceeds will be used for general corporate purposes.
The BondbloX Team is growing! We’re currently looking for a passionate fixed income sales person who can join our Singapore office and ride the fixed income electronification wave with us.
Our ideal candidate will have 6 to 12 years of experience in cash bond sales / research / product management in exchanges, brokers, banks or EAMs. If you or anyone you know is interested, please write to our co-founder and CEO, Dr. Rahul Banerjee at rahul.banerjee@bondblox.com.
Haircut refers to a reduction in value of an asset for the purpose of calculating either margin requirements, level of collateral or salvage value. The haircut is generally stated as a percentage and is the difference between the value of the asset and its reduced value. For example, in a restructuring, if a bond worth $100mn faces a haircut of 20%, then holders would receive only $80mn. In the case of a loan, if the collateral is worth $100mn, a haircut of 30% would imply that a loan of $70mn, giving the lender a cushion in case the market value of the collateral falls.
On Junk Issuers Rush to Refinance With Spreads Lowest Since 2022
Bill Zox, PM at Brandywine Global Investment
“The nominal cost of borrowing has come down dramatically since the end of October, and the market is very receptive to new issuance”
“Rapid currency moves are undesirable. It is important for currencies to move stably, reflecting economic fundamentals… If I answer the question about currency intervention, it could have unintended effects on the market… if there’s excessive moves, we will respond appropriately without ruling out any measures.”
Brazil’s Lula steps up interventions in Brazil’s largest companies
Brazil President Lula
“Brazilian companies need to agree with the Brazilian government’s development thinking. That’s what we want”
Thierry Larose, EM bond portfolio manager at Swiss bank Vontobel
“These random statements by Lula are absolutely counterproductive. It’s a shame because he’s done well in the past and the current state of the economy is not so bad”