The S&P rose 0.9% while Nasdaq was up 1.2% as equities recovered from two straight days of losses. Small-cap stocks rallied over 2%, bringing 2021 gains for the US small-cap index, Russell 2000 to more than 13%. European equities also inched up with DAX, CAC and FTSE rising 0.4%, 0.7% and 0.5% respectively. US IG CDS spreads tightened by 0.6bp and HY tightened 1.9bp. EU main CDS spreads and crossover spreads narrowed by 0.1bp and 2.0bp respectively. Asian equity markets are 0.6% higher and Asia ex-Japan CDS spreads narrowed by 2.7bp.
New Bond Issues
- Petronas $ 10Y/40Y at T+135/T+155bp area
- AVIC $ 5Y at T+260bp area
- Pakuwon Jati $ 7NC4 at IPG 5.2% area; books over $600mn
- BOC Aviation $ 3Y at T+165bp area
- Dalian Wanda Commercial Management Group $ 364-day at 7.5% area
- Santos $ 10Y at T+250bp area
Bank of China Luxembourg branch raised $500mn via a 5Y green bond at a yield of 1.454%, 34bp inside initial guidance of T+100bp area. It also raised €500mn via a 3Y green bond at a yield of 0.018%, 24bp inside initial guidance of MS+70bp area. Both dollar and euro bonds have expected ratings of A1/A/A. The euro bonds received orders over €1.4bn, 2.8x issue size. Further, the Bank of China Singapore branch raised $500mn via a 3Y green bond at a yield of 0.85%, 37bp inside initial guidance of T+90bp area. The bonds have the same expected ratings of A1/A/A, and received orders over $1.9bn, 3.8x issue size. Net proceeds will be used to finance and/or refinance eligible green projects as defined in BOC’s sustainability series bonds management statement.
Sino-Ocean Group raised $400mn via a 5Y green bond at a yield of 3.434%, 40bp inside initial guidance of T+305bp area. The bonds have expected ratings of Baa3/BBB-, and received orders over $2.1bn, 5.25x issue size. Wholly-owned subsidiary Sino-Ocean Land Treasure IV is the issuer with a guarantee from the parent. Proceeds will be used to repay debt of the guarantor and its subsidiaries that are due in 1 year, in accordance with its green finance framework.
Changchun Urban Development raised $200mn via a 3Y bond at a yield of 4.3%, 20bp inside initial guidance of 4.5% area. The bonds have expected ratings of Baa1/BBB+. The bonds will be issued by wholly-owned subsidiary Chang Development International and guaranteed by the parent. Proceeds will be used for general corporate and refinancing purposes.
Equate Petrochemical BV raised $700mn via a 7Y bond at a yield of 2.641%, 30bp inside initial guidance of T+170bp area. The bonds are callable at par within 3 months from maturity, and have a make-whole call (MWC) on January 28, 2028. The bonds have expected ratings of Baa2/BBB, in line with issuer ratings. The bonds will be issued by Equate Petrochemical BV, which operates as a special purpose entity to issue debt, and guaranteed by its parent company Equate Petrochemical Company K.S.C.C. and The Kuwait Olefins Company K.S.C.C.
KNOC subsidiary Harvest Operations raised $500mn via a 3NC1 bond at a yield of 1.052%, 27bp inside initial guidance of T+100bp area. The bonds have expected ratings of Aa2/AA. Proceeds will be used for repaying guaranteed notes due in April this year and maturing credit facilities as well as for general corporate purposes.
Jingrui Holdings raised $157mn via a 2.5Y bond at a yield of 12.5%, in line with final guidance of 12.5%. The bonds have expected ratings of B-, and proceeds will be used to refinance existing debt.
Shangrao Innovation Development Industry Investment Group raised $68mn via a 3Y credit-enhanced bond at a yield of 2%, 30bp inside initial guidance of 2.3% area. The bonds are unrated and proceeds will be used for industrial park construction and general working capital.
New Bond Pipeline
- Incheon Int’l Airport $ 5Y green bond
China Water Affairs Group $ green bond
- China Hongqiao Upgraded To ‘BB-‘By S&P On Improved Financial Discipline; Outlook Stable
- RAC Bond Co. U.K. Corporate Securitization Ratings Raised By S&P Following Review
- Moody’s upgraded the long- and short-term ratings of Caterpillar and its supported finance operations to A2 and Prime-1; outlook is stable
- Moody’s upgrades Allied Universal CFR and secured to B2 from B3, unsecured to Caa1 from Caa2; outlook stable
- Fitch Affirms Ovintiv IDR at BB+; Revises Outlook to Positive
- Fitch Affirms Micron Technology at ‘BBB’; Revises Outlook to Positive from Stable
- Fitch Revises Outlook on Guangzhou R&F, Sub, to Stable; Affirms ‘B+’; Withdraws Local-Currency IDR
- Minsur S.A. Outlook Revised To Positive From Stable On Increased Production And Higher Prices; ‘BB+’ Ratings Affirmed
- Moody’s affirms Empresa Electrica Cochrane SpA’s Ba1 rating; changes outlook to negative
- Natura & Co Assigned ‘BB’ And ‘brAAA’ Issuer Credit Ratings By S&P; Natura Cosméticos Proposed Notes Rated ‘BB’; Outlook Stable
- Ratings On Piraeus Bank S.A. (London Branch) Euro Medium-Term Note Program Withdrawn At The Company’s Request By S&P
- Moody’s withdraws Unione di Banche Italiane S.p.A.’s ratings and assessments
- Moody’s withdraws Hikma’s ratings for business reason
Term of the Day
Initial Price Guidance
The ECB council “only agreed to this front-loading of bond-purchases on the condition that they would be reduced again in the third quarter and that PEPP is not expanded again”. “The market can handle an exit from PEPP,” he said.
“These are trial balloons being floated by the hawks to see how the market reacts,” said Utermöhl. “But it is odd for the ECB to fuel discussion about this at a time when we are lagging so far behind the US, and even there the Federal Reserve is still pushing back against any suggestion of tapering.”