Join Us for The Upcoming 8-Module Course on Bonds – Curated for Investors & Professionals
The course will be conducted via Zoom over 8 modules on 27-30 September and 4-7 October (Monday-Thursday) at 5pm Singapore / 1pm Dubai / 10am London. The course will be conducted by senior debt capital market bankers and professionals who will cover both fundamental concepts as well as the practical aspects of bonds.
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New Bond Issues
- Sands China $ 5Y/7Y/10Y at T+190/215/230bp area
- China Merchants Securities International $ 500mn 3Y at T+130bp area
- CMB Financial Leasing $ 3Y/5Y green at T+130/150bp area; EUR 3Y green @ MS+125bp area
- Nippon Life $ 30NC10 bond at 3.25% area
- Denso $ 5yr sustainability at T+70bp area
Emirate of Abu Dhabi raised $3bn via a two-part deal. It raised $1.75bn via a 10Y bond at a yield of 1.966%, 27bp inside initial guidance of T+90bp area, and $1.25bn via a 30Y bond at a yield of 3%, 24.4bp inside the initial guidance of T+130bp area. The bonds have expected ratings of AA/AA (S&P/Fitch). The new 10Y bonds offer a new issue premium of 4.6bp over its older 1.7% bonds due March 2031 while its new 30Y bonds priced 1bp inside its older 3.875% bonds due April 2050, despite the longer tenor.
SMC Global Power raised $150mn via a tap of 5.45% PerpNC5 at a price of 100.125 (yield of 5.42%), inside the initial guidance of 100 area. The bonds are unrated, and received orders over $375mn, 2.5x issue size. Proceeds will be used for investments in a power plant and related assets or for general corporate purposes. There is a coupon step-up of 250bp on December 9, 2026 as well as a dividend pusher and stopper. Philippine conglomerate San Miguel wholly owns SMC Global Power, which generates electricity from natural gas, coal and renewable energy such as hydroelectric power, and is also engaged in distribution and retail electricity services. The 5.45% Perps are currently trading at 100.55 yielding 5.33%.
- $1.2bn via a 4.75Y bond at a yield of 1.181%, 22bp inside the initial guidance of T+60bp area
- $500mn via a 4.75Y floater at SOFR+52bp or a yield of 0.57% vs. initial guidance of SOFR equivalent
- $800mn via a 10Y bond at a yield of 1.981%, 20bp inside the initial guidance of T+85bp area
- $750mn via a 3Y bond at a yield of 0.818%, 20bp inside the initial guidance of T+60bp area
- $750mn via a 3yr floater at SOFR+44bp or a yield of 0.49% vs initial guidance of SOFR equivalent
- $750mn via a 5yr bond at a yield of 1.351%, 20-25bp inside the initial guidance of T+75-80bp area
New Bonds Pipeline
- IBK $ sustainability 3Y or 5Y bond
- Oxley Holdings S$ tap of 6.9% 2024s bond
- JSW up to $1bn planned issuance
- ICBC $6bn AT1 Perp
- Kuveyt Türk hires for $350m 10.25NC5.25 inaugural sustainability T2 sukuk
Rating Changes
- Allegheny Technologies Inc. Outlook Revised To Stable by S&P From Negative; New Debt Rated ‘B’
- Moody’s – Emerging Asia is growing at different speeds, with the pandemic still posing risks
- Fitch Revises Banco BPI’s Outlook to Stable After Similar Action on CaixaBank
Term of the Day
Inverted Yield Curve
An inverted yield curve occurs when short-term yields move higher than the long-term yields. With respect to Treasury bonds, an inverted yield curve (3M10Y curve or 2Y10Y curve) has historically shown an impending recession. Similarly, for corporate bonds, an inverted yield curve would indicate that while the company may struggle to meet short-term payments, it is likely to improve its financial position in the longer-term. An inverted yield curve would highlight liquidity risks for the issuer while solvency might still be fine.
El Salvador’s yield curve is seen as inverted with its 2023s yielding 12.4%, 2027s yielding 10.9% and its 2041s yielding 10%.
Talking Heads
On Fed’s Williams Talking About 2021 Taper Start
“It could be appropriate…Assuming the economy continues to improve as I anticipate, it could be appropriate to start reducing the pace of asset purchases this year…I will be carefully assessing the incoming data on the labor market and what it means for the economic outlook, as well as assessing risks such as the effects of the delta variant…I think it’s clear that we have made substantial further progress on achieving our inflation goal. There has also been very good progress toward maximum employment, but I will want to see more improvement before I am ready to declare the test of substantial further progress being met.”
“They will try hard to pitch this as a recalibration of purchases from emergency settings rather than the start of a taper down to zero…Higher yields might be tolerated, but higher spreads may not.”
On China Crackdown Creating Opportunities in Corporate Debt – Baring Asset Management
Omotunde Lawal, head of emerging-market corporate debt
“Looking back at similar crackdown episodes in the past, we note that the Chinese government did eventually ease restrictions to avoid stifling wider economic growth momentum. For most those past episodes, the market’s initial negative reaction created buying opportunities for long term investors…Despite the severe market volatility recently witnessed, generally speaking, Chinese corporate fundamentals remain strong…In the tech sector, for example, many of the companies impacted are investment-grade rated, with strong balance sheets, high net cash positions and low amounts of debt. In the real estate sector, for instance, companies that can endure the changes could emerge with stronger balance sheets….and for the tech sector, increased competition and the break-up of monopolies could bring fairer prices for consumers and better protections for workers.”
Top Gainers & Losers – 09-Sep-21*
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