US factory orders for June grew by 1.5% vs. 2.3% in the previous month, but better than the forecasted 1%. Brazil’s industrial production for June recorded 0% vs 1.4% in the previous month and lower than the forecast of 1.7%. Eurozone PPI for June at 1.4% was in-line with forecasts and marginally better than May’s 1.3%. US IG CDS tightened 0.1bp and HY spreads tightened 0.8bp. EU Main and Crossover spreads widened 0.1bp and 0.9bp respectively. Asia ex-Japan CDS spreads were 0.3bp tighter.
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New Bond Issues
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Summit Digitel Infrastructure $ 10Y at T+215a
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Ningbo Yincheng Group capped $200mn 3Y at 2.7% area
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Nanjing Jiangbei New Area Industrial Investment 364-day $ notes at 2.8% area
UBS Group raised $2bn via a 6Y non-call 5Y (6NC5) bond at a yield of 1.494%, 20bp inside initial guidance of T+105bp area. The bonds have expected ratings of A-/A+. Separately, UBS AG London raised $2bn in a dual-tranche offering. It raised $1bn via a 3Y bond at a yield of 0.714%, 20bp inside initial guidance of T+60bp area. It also raised another $1bn via a 3Y floater at a yield of 0.50%, SOFR+45bp as compared to initial guidance of SOFR equivalent. The bonds have expected ratings of Aa3/A+/AA-.
JPMorgan raised $1.25bn via a 4NC3 green bond at a yield of 0.768%, 20bp inside initial guidance of T+65bp area. The SEC registered bonds are rated A-. Proceeds will be used to fund Eligible Green Projects, as defined under “Use of Proceeds” in their Prospectus Supplement.
Mapletree Investments raised S$600mn via a Perpetual non-call 3Y (PerpNC3) fixed-for-life bond at a yield of 3.7%, 30bp inside initial guidance of 4% area. The bonds are unrated. Subsidiary Mapletree Treasury Services is the issuer. IFR notes that the call date is in three years instead of the typical five, to raise the comfort level for local investors unfamiliar with the fixed-for-life structure, which has no reset or step-up features. The coupon is deferrable, cumulative and compounding. If there is a change of control event and if the notes are not redeemed the coupon will increase by 100bp. Private banks received a 25-cent rebate.
China Ping An Insurance Overseas (Holdings) raised $550mn via a 10Y bond at a yield of 2.859%, 42.5bp inside initial guidance of T+210bp area. The bonds have expected ratings of Baa2, and received orders over $1.2bn, 2.2x issue size. Asian took 96% of the notes and Europe 4%. Fund/asset managers received 57%, banks and insurers 28%, private banks and securities firms 12% and central banks and corporates 3%. The issuer is the offshore financing and investment arm of Ping An Insurance (Group) Co of China. Proceeds will be used for refinancing and general working capital purposes.
Kasikornbank raised $350mn via a PerpNC5.5 AT1 bond at a yield of 4%, 25bp inside initial guidance of 4.25% area. The bonds have expected ratings of Ba1, and received orders over $800mn, 2.3x issue size. Asia took 88% and the rest went to EMEA. Fund/asset managers bought 58%, private banks 31% and insurers and pension funds 11%. The coupon will reset on the first call date (February 10, 2027) and every five years thereafter to the then prevailing US 5Y Treasury yield + 333.7bp. There is a dividend stopper. The notes will be written down if the bank’s CET1 ratio is less than 5.15% on either a standalone or consolidated basis, or if the Bank of Thailand deems the bank to be non-viable. Proceeds will be used for general corporate purposes. The bank’s current CET1 stands at 15.5%.
Bank of China (HK Branch) raised $500mn via a 3Y floater at a yield of SOFR+48bp as compared to initial guidance of SOFR+80bp area. It also raised £300mn ($418mn) via a 2Y GBP floater at a yield of 0.6104%, 19bp inside initial guidance of SONIA+75bp area. The bonds have expected ratings of A1/A/A. The dollar bonds received orders over $1.2bn, 2.4x issue size and the GBP bonds received orders over £590bn ($821bn), 1.97x issue size.
New Bonds Pipeline
- HDFC Bank hires for $ AT1 Bond
- Perusahaan Pengelola Asset hires for $ bond; calls starting today
Rating Changes
- Tata Steel Ratings Raised To ‘BB’ By S&P On Significant Expected Deleveraging; Outlook Stable
- T-Mobile US Inc. Ratings Raised To ‘BB+’ From ‘BB’ By S&P; Outlook Stable
- Bath & Body Works Inc. Raised To ‘BB’ By S&P On Separation From Victoria’s Secret, Good Operating Performance; Outlook Positive
- Moody’s changes the outlook on Saipem to negative; affirms its Ba2 CFR
- Fly Leasing Ltd. Ratings Affirmed And Removed From CreditWatch Developing By S&P On Completed Acquisition, Outlook Negative
- Fitch Revises Square’s Outlook to Positive; Affirms IDR at ‘BB’
- Fitch Downgrades Genneia’s IDRs to ‘C’ on Proposed Exchange Offer
ICYMI: July 2021: 52% of Dollar Bonds Traded Higher with IG Outperforming
The month of July saw a continuation of June’s move with 52% of dollar bonds in our universe delivering a positive price return ex-coupon during the month compared to 54% in the prior month. But, unlike June where both Investment Grade (IG) and High Yield (HY) bonds traded in tandem (53% and 55% of IG & HY moved higher in June), July saw IG outperform with 64% of dollar bonds in the green. HY in comparison had a rather gloomy month with 64% of dollar bonds in the red.
The drag in the HY space was dominated by China real estate developers, led by China Evergrande’s dollar bonds that dropped over 50% and peers like Rongxinda, RiseSun, R&F Properties, Fantasia, Yuzhou also dropping sharply in the month.
For the box & whisker chart of investment grade bonds, issuance volumes, largest deals, top gainers and losers for July, click the button below:
Term of the Day
Tuna Bonds
Tuna Bonds were bonds issued by Mozambique in 2013 to finance Mozambican state-owned fishing company EMATUM’s plans to develop tuna fishing. Credit Suisse, which helped facilitate the transaction is set to face a trial after funds from the tuna bond issuances were used for purchasing military equipment instead.
Talking Heads
On the possibility that Sri Lanka will run out of debt repayment options
