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US Treasury yields jumped higher across the curve with the 5Y and 10Y yields up 9bp. US PPI rose in February by the most in six months, driven by higher fuel and food costs. It rose 1.6% YoY vs estimates of 1.2% and the Core PPI rose 2.0% vs estimates of 1.9%. Separately, US Retail Sales rose 0.6% YoY last month, but lower than forecasts of 0.8%. Initial jobless claims fell 1k to 209k, below estimates of 218k. Credit markets saw US IG CDS spreads widen 1.2bp and HY spreads widen by 8bp. Looking at equity indices, S&P and Nasdaq both fell 0.3% each.
European equity indices closed lower too. European IG CDS spreads widened 1.5bp and HY spreads were 10bp wider. Asian equity markets have opened in the red today. Asia ex-Japan IG CDS spreads were 0.1bp tighter.
Turkiye Sinai Kalkinma Bankasi AS raised $300mn via a PerpNC5 AT1 bond at a yield of 9.75%, roughly 25bp inside initial guidance of low 10% area. The notes are rated CCC-. The bonds are callable on 21 March 2029, and if not called, the coupon resets then and every five years thereafter to the prevailing 5Y US Treasury yield plus 545.4bp. Proceeds will be used for general corporate purposes.
Hyundai Capital America raised $1.7bn via a three-part deal. It raised:
The notes are rated A3/BBB+, and proceeds will be used for general corporate purposes.
Volkswagen raised $4bn via a five-tranche deal.
A change of control put is a common covenant in bond offerings, mentioned in the bond’s prospectus. Bonds that carry a change of control put offer bondholders the option to sell the bonds back to the issuer at a pre-defined price upon the occurrence of a change of control event, which is typically a change in ownership of the issuer. The option to redeem the bonds in this case lies with the bondholder, as against a call option, which lies with the issuer, not the bondholder.
On Second Trump Term Would Spark a 3% Dollar Rally – Barclays
US dollar could rally 3% if former President Trump is re-elected… “proposals across trade, fiscal and foreign policy amount to a structural break with the past” … Trump’s trade and other proposals could add to “this latest incarnation of US exceptionalism” that has supported the dollar.
On BlackRock, Man Group Reveal Big Japan Bets Before BOJ Decision
Yue Bamba, head of Japan active investments at BlackRock
“This is a momentous event… I think we’re a long way away from things being fully priced in”
Michiko Sakai, PM at JPMorgan Asset Management
“We’re investing more in insurers than banks as we prefer the higher risk-reward and recent governance reforms”
Emily Badger, PM at Man Group
“We are exposed to more contrarian opportunities within the bank sector”
On Soaring Short Bets on Vanke Signal Investor Worries Over Debt
JPMorgan Chase & Co
Bank support may ease “some pressure for Vanke, this is another solid proof that its liquidity is truly under stress”.
Jeff Zhang, analyst at Morningstar
“Investors’ major concerns for Vanke are Moody’s downgrade, weak home sales and its mixed-ownership structure… still too early to say that it won’t default”
Ghana to Start Debt Restructuring Negotiations With Bondholders