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US Treasury yields moved higher by 6-7bp across the curve on Wednesday, after having dropped by more than 20bp a day prior. US Retail Sales fell for the first time in seven months, by 0.1% in October vs. a pick-up of 0.9% in September. Core Retail Sales rose 0.2% last month vs. a rise of 0.7% a month prior to that. Also, The producer price index (US PPI) rose 1.3% YoY last month, lower than expectations of a 1.9% increase. The Peak Fed Funds Rate was unchanged. US credit markets saw IG CDS spreads widening by 0.6bp while HY spreads widened by 3.6bp. S&P rose and Nasdaq inched higher by 0.1-0.2%.
European equity markets closed were stable too. In credit markets, European main CDS spreads were wider by 1bp and crossover spreads widened by 2.9bp. Asian equity markets have opened weaker today and Asia ex-Japan IG CDS spreads were tighter by 1.1bp.
We are excited to share that our company has raised a $6mn in Series B funding. The round saw new investor Beacon VC, the corporate venture arm of Thailand’s Kasikornbank, join existing shareholders MassMutual Ventures and Citigroup who also participated in the round. Click on the banner below for details.
Deutsche Bank NY raised $1.5bn via a 6NC5 senior non-preferred bond at a yield of 6.819%, 40bp inside initial guidance of T+270bp area. If uncalled, the coupon will reset at the overnight SOFR plus a spread of 251bps and will be paid quarterly. The bonds have expected ratings of Baa1/BBB-/A-. Proceeds will be used for general corporate purposes.
SocGen raised €2.25bn via a two-part deal. It raised €1bn via a 5Y social senior preferred bond at a yield of 4.158%, 25bp inside initial guidance of MS+130bp area. The bonds have expected ratings of A1/A/A, and received orders over €2.6bn, 2.6x issue size. The bonds also have a 75% clean-up call. Proceeds will be used to finance/refinance eligible social projects/activities as defined in the Sustainable & Positive Impact Bond Framework of Société Générale Group. It also raised €1.25bn via a 8NC7 senior non-preferred bond at a yield of 4.985%, 25bp inside initial guidance of MS+215bp area. If uncalled, the coupon will reset at the 3M EURIBOR plus a spread of 190bps and will be paid quarterly. The bonds have expected ratings of Baa2/BBB/A-, and received orders over €2.9bn, 2.3x issue size. Proceeds will be used for general financing purposes.
Agricultural Bank of China (ABC) London raised $300mn via a 3Y green FRN at a yield of 5.955%. The floating coupon will reset at the overnight SOFR plus a spread of 60bps and will be paid quarterly. The senior unsecured bonds have expected ratings of A1 (Moody’s). Proceeds will be used to exclusively finance/refinance eligible green projects.
Nabors raised $650mn via a 6NC2.5 bond at a yield of 9.125%, 12.5bp inside initial guidance of 9.25% area. The senior secured bonds have expected ratings of Ba3 (Moody’s). Proceeds will be used to repay all of its outstanding 5.75% senior notes due in 2025 and the remaining will be used for general corporate purposes.
Secured Overnight Financing Rate (SOFR) is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities. SOFR is calculated as a volume-weighted median of three rates – tri-party repo data collected from BNY Mellon, General Collateral Financing (GCF) Repo transaction data and data on bilateral Treasury repo transactions cleared through FICC’s DVP service, which are obtained from DTCC Solutions LLC. SOFR was selected as the representative rate for use in USD derivatives, and was suggested as an alternative to LIBOR.
Refuse to rule out another interest rate increase, given uncertainty about whether the Federal Reserve has done enough to push consumer price growth back down to its 2% target… little concern about the recent sharp fall in US government bond yields, which has loosened financial conditions.
On EM Asia Bonds Losing Out in Global Rally on Peak Fed Bets
Sanjay Mathur, economist at ANZ Banking Group
“While Asian bond yields will mimic moves in Treasuries, a pivot from emerging Asia central banks ahead of the Fed is still an unlikely proposition.. At a minimum, we need clear communication from the Fed that its next move will be a ‘cut’ before regional central banks begin easing”
UK Bond Demand Smashes Record as Investors Clamor for Yield
Megum Muhic, analyst at RBC Capital Markets
The 20Y sector is somewhat of a sweet spot for demand. Investors may have used this syndication deal to switch out of bonds with similar maturities into the cheaper new issue.