This site uses cookies to provide you with a great user experience. By using BondbloX, you accept our use of cookies.
US Treasury yields were only 1bp higher across the curve on Wednesday. New York Fed President John Williams said that it was still too soon to call for rate cuts as the central bank still has some distance to go on getting inflation back to its 2% target. US credit markets saw IG CDS spreads tighten by 1.2bp and HY spreads tighten 7bp. US equity markets closed higher, with the S&P and Nasdaq up 0.6-0.8%.
European equity markets ended slightly higher. Credit markets in the region saw the European main CDS spreads tighten by 2.2bp and crossover spreads tighten by 11bp. Asian equity markets have opened in the green today. Asia ex-Japan IG CDS spreads tightened by 3.1bp.
State Bank of India (SBI) raised $600mn via a 5Y bond at a yield of 5.112%, 33bp inside initial guidance of T+150bp area. The senior unsecured bonds are rated BBB-/BBB-. Proceeds will be used for general corporate purposes. The bonds have a change of control put option at 101 if the aggregate of direct and indirect Government of India’s shareholding falls below 51%. This is the first dollar deal by an Indian corporate this year. The new bonds were priced ~6bp over its 4.875% 2028s that yield 5.05%.
Rizal Bank raised $400mn via a 5Y sustainable bond at a yield of 5.606%, 30bp inside initial guidance of T+195bp area. The notes are rated Baa3 by Moody’s. Net proceeds will be applied by Rizal Bank to support finance and/or refinance the RCBC’s loans to customers or its own operating activities in eligible green and social categories as defined in its sustainable finance framework.
Sumitomo Life Insurance raised $1.04bn via a PerpNC10 bond at a yield of 5.875%, 37.5bp inside initial guidance of 6.25% area. The subordinated bonds are rated A3/A-. If not called by 18 January 2034, the coupons would reset then and every 5 years thereafter by 5Y US Treasury yield plus 384.1bp, alongside a 100bp coupon step-up.
First Abu Dhabi Bank (FAB) raised $800mn via a 5Y bond at a yield of 4.779%, 15bp inside initial guidance of T+100bp area. The senior unsecured bonds are rated Aa3/AA-. The new bonds were priced ~3bp tighter to its 4.581% 2028s.
RBC raised $4bn via a four-trancher. It raised:
The senior unsecured bonds are rated A1/A/AA-. Proceeds will be used for general corporate purposes.
CICC raised $1.2bn via a dual-trancher. it raised $500mn via a 3Y bond at a yield of 5.012%, 40bp inside initial guidance of T+130bp area. It also raised $700mn via a 3Y FRN at a yield of SOFR+95bp vs. initial guidance of SOFR+140bp area. The notes are rated BBB+ by Fitch. The issuer is CICC Hong Kong Finance 2016 MTN Ltd. Proceeds will be used to repay certain existing indebtedness and for working capital and other general corporate purposes of the guarantor and its subsidiaries.
Shock Therapy refers to sudden, dramatic changes in national economic policy in order to turn a state-controlled economy into a free-market economy. Shock therapy is intended to cure economic maladies—such as hyperinflation, shortages, and other effects of market controls—to jump-start economic production, reduce unemployment, and improve living standards. However, shock therapy can also have a negative impact on the economy, for instance leading to an increase in unemployment and civil unrest.
Recently, Argentina has implemented the ‘shock therapy’ economic reforms to fix its worst economic crisis in decades.
On more work needed to bring inflation back to target – New York Fed President John Williams
“We have seen meaningful progress on restoring balance to the economy and bringing inflation down… our work is not done… I expect that we will need to maintain a restrictive stance of policy for some time…will only be appropriate to dial back the degree of policy restraint when we are confident that inflation is moving toward 2% on a sustained basis”
On Fed Rate Cuts May Be Steeper Than Expected – JPMorgan Asset Management
“What the market’s pricing is roughly 1.5% of cuts and that’s probably a reasonable central case. In bad economic outcomes it could be, you know, quite a bit bigger than that… It’s been a big surprise to us and others that actually inflation’s come down without significant weakness in the economy… it seems much more likely the central banks can get back to target”
On no longer expecting a US recession, forecasting three rate cuts – Fitch
Fitch no longer forecasts a U.S. recession this year due to several signs of strength in the economy. Federal Reserve is likely to cut interest rates three times in 2024
On US Bond Markets Trimming Bets on Treasuries Ahead of CPI
“New long risk in USTs has been added for the first time since the start of the year”… positioning is now “tactically neutral but structurally long.”