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US Treasury yields continued to inch higher across the curve on Tuesday. The final reading for February’s US Durable Goods Orders came at 1.3%, slightly lower than the preliminary 1.4% reading. Final Capital Goods Orders held intact, rising 0.7%. Cleveland Fed President Loretta Mester said that the Fed could begin reducing the fed funds rate “later this year”, if inflation “continues on its downward path toward 2%, and labor markets and economic growth remain solid”. However, she also said that she does not expect to have enough information by the next FOMC meeting to make a call. Credit markets saw the US IG CDS spreads widen 0.7bp and the HY spreads widen 6bp. Looking at equity indices, S&P and Nasdaq ended lower by 0.7% and 1% respectively.
European equity indices ended lower. European IG CDS spreads widened 1.6bp and crossover spreads were 10bp wider. Asian equity markets have opened in the red today. Asia ex-Japan IG CDS spreads were 2.5bp wider.
GM Financial raised $2.5bn via a two-trancher. It raised $1.25bn via a long 5Y bond at a yield of 5.562%, 27bp inside initial guidance of T+150bp area. It also raised $1.25bn via a 10Y bond at a yield of 5.953%, 27bp inside initial guidance of T+190bp area. The senior unsecured notes are rated Baa2/BBB/BBB. Proceeds will be used for general corporate purposes. Its planned 5Y FRN was dropped at guidance stage.
TotalEnergies Capital raised $4.25bn via a three-part deal. It raised:
The senior unsecured notes are rated A1/A+. Proceeds will be used for general corporate purposes.
Enbridge raised $3.5bn via a four-trancher.
The senior unsecured notes are rated Baa2/BBB+/BBB+. Proceeds will be used to reduce debt, finance future growth opportunities, including acquisitions/capex or for general corporate purposes.
The BondbloX Team is growing! We’re currently looking for a passionate fixed income sales person who can join our Singapore office and ride the fixed income electronification wave with us.
Our ideal candidate will have 6 to 12 years of experience in cash bond sales / research / product management in exchanges, brokers, banks or EAMs. If you or anyone you know is interested, please write to our co-founder and CEO, Dr. Rahul Banerjee at rahul.banerjee@bondblox.com.
The Treasury Basis Trade is a trade which involves buying/selling a treasury bond and simultaneously taking the opposite position in a corresponding treasury futures contract. When a trader buys the bond and sells the futures, it is considered to be a ‘long basis’ trade and when he/she sells the bond and buys the futures, it is a ‘short basis’ trade. Fed economists reported that the cash-futures basis positions could be exposed again to stress during broader market corrections. The unwinding of basis trades contributed to illiquidity in Treasuries in March 2020 and Fed economists want to prevent another event of a similar origin. Authorities want any unwinding of the trade to happen in an orderly manner.
On Vanke Leading Slide in China Developers After First Sell Rating – JPMorgan Chase
Vanke “will undergo a challenging time of deleveraging and relying on banks and state-owned enterprises’ support”… Vanke’s decision not to pay a dividend … are among other reasons for investors to be worried
On Indian Banker Seeing High Funding Costs for Shadow Banks
Sujata Guhathakurta, president and head of debt capital markets at Kotak
Expect “the largest supply coming from NBFCs as their liability profile may need to be skewed more toward capital markets as bank credit to this sector has been muted”
On Bond Traders Loading Up on Bearish Wagers as Rate-Cut Odds Dwindle
Ed Al-Hussainy, a rates strategist at Columbia Threadneedle
Treasury market backdrop “is being shaped by rising growth expectations”