US markets closed mixed even as the number of US job openings expanded – the S&P fell 0.1% from its record while Nasdaq inched up 0.2%. Healthcare, Consumer Staples and Financials, up ~0.3% provided support to the bourses while Energy down 1.5% and Real Estate, Industrials and IT down ~0.4% dragged the indices lower. European markets continued to hover close to records – the FTSE was up 0.1% while CAC and DAX were down ~0.1%. Saudi’s TASI closed 0.2% lower while UAE’s ADX was up 1%. Brazil’s Bovespa gained 0.2%. APAC stocks had a soft start on concerns over the spread of the Delta variant – Singapore’s STI, Nikkei and HSI were 0.2-0.6% while Shanghai is down 0.2%. US 10Y Treasury yields gained 1bp to 1.31%. US IG CDS spreads widened 0.4bp and HY widened 3.3bp. EU Main CDS spreads widened 0.4bp and Crossover spreads tightened bp. Asia ex-Japan CDS spreads were 0.5bp tighter.
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New Bond Issues
- Temasek markets S$ 50Y bonds at 2.85% area
- Goho Asset Management tap of $ 8.5% June 2023s final at 8.5%
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Taiyuan Longcheng Development Investment Group capped $77mn 364-day notes at 2.75% area
- Shangrao Innovation Development $ 35-month credit-enhanced bonds final at 4%
Bombardier raised $750mn via a 6.5 non-call 2.5Y (6.5NC2.5) bond at a yield of 6%, unchanged from initial guidance of 6% area. The bonds have expected ratings of Caa1/CCC. Proceeds will be used to redeem their 6% Senior Notes due 2022 and 6.125% Senior Notes due 2023.
New Bonds Pipeline
- Perusahaan Pengelola Asset hires for $ bond
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Zhuhai Huafa Group hires for $ senior perp
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Sichuan Development Holding hires for $ bonds; calls today
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PCGI Holdings hires for $ 5NC3 bond; calls today
- HDFC Bank hires for $ AT1 Bond
Rating Changes
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Moody’s upgrades Bombardier’s CFR to Caa1 and assigns Caa1 to new notes; outlook stable
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Moody’s upgrades ArcelorMittal’s ratings to Baa3; stable outlook
- E-House Downgraded To ‘B+’ By S&P On Expected Negative Operating Cash Flow; Outlook Stable
- CITIC Group And CITIC Ltd. Outlook Revised To Positive By S&P On Bank’s Improving Capitalization; ‘BBB+’ Ratings Affirmed
- Bombardier Inc. Outlook To Stable From Negative By S&P On Lowered Refinancing Risk; ‘CCC+’ ICR Affirmed; US$750M Notes Rated
- CAPEX S.A.’s Stand-Alone Credit Profile Revised Up To ‘b-‘ From ‘ccc+’ By S&P On Stronger Cash Flows, ‘CCC+’ Ratings Affirmed
Term of the Day
Bid-to-Cover
Bid-to-cover is a ratio of the number of bids or orders received for a particular security issuance vs. the amount issued. The bid-to-cover ratio indicates the demand for an issuance – higher the ratio, higher the demand and vice versa. Last week, Ping An Insurance Overseas raised $550mn via a 10Y bond that drew orders over $2.9bn, with a bid-to-cover of 5.3x.
Talking Heads
“Whilst there are considerable amounts of uncertainty, our analysis suggest that it is possible for recovery in a potential restructuring scenario to be close to current market pricing. And if the onshore operations for Hengda Real Estate can continue, we believe that a more negative outcome can be avoided. Therefore, despite our expectation that market conditions will continue to be volatile, we believe that contagion risk may be contained.”
Top Gainers & Losers – 10-Aug-21*
