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US Treasury yields moved further higher across the curve by 6-7bp. The preliminary US Q1 GDP estimate showed a 1.6% annualized increase, much lower than economists’ expectations of a 2.5% increase and the previous quarter’s 3.4%. The US Core PCE Price Index for the quarter grew at a faster-than-expected 3.7% clip vs. expectations of a 3.4% print. Initial jobless claims for the previous week rose by 207k, lower than expectations of 215k. US IG CDS spreads widened 0.2bp and HY spreads were 1bp wider. S&P and Nasdaq ended lower by 0.5-0.6%.
European equity indices ended mixed. European IG CDS spreads widened 0.9bp while crossover spreads were 4.1bp wider. Asian equity markets have opened in the green today. Asia ex-Japan IG CDS spreads were 2.1bp wider.
Kuwait International Bank (KIB) raised $300mn via a PerpNC5.5 AT1 sukuk at a yield of 6.625%, 37.5bp inside initial guidance of 7% area. The subordinated notes are unrated. The profit rate is fixed until the first reset date of 1 November 2029, and if not called, it resets to the 5Y UST plus 195.3bp. The issuer is KIB Tier 1 Sukuk 2 Ltd. This is only the second AT1 issuance out of the GCC region this year, after Alinma’s unrated 6.5% Perp callable in March 2029. The new KIB note is priced 28.5bp wider to Alinma’s note that currently yields 6.34%.
An importer bond is the most common type of Customs bond. This type of bond allows an importer of merchandise to bring their goods into the United States. The bond guarantees that the entry paperwork is filed correctly by the principal or principal’s customs broker and the appropriate amount of duties, taxes and fees will be paid by the principal to Customs. An importer bond can be issued as a continuous bond, or as a single entry bond.
Argentina plans to issue similar bonds called as “Bopreal” which stands for “bonds for the reconstruction of a free Argentina” in an effort to lift currency controls.
On Stick to Value Stocks, Avoid Tech as US Yields Soar – Bill Gross
“Stick to value stocks, avoid tech for now… Treasuries was “moving to 4.75%… Why own bonds?”
On Barclays Leading European Banks in Showing Path After Rate Hikes
“Deals flow and the equities markets themselves have started to show some buoyancy… want to increase what we do in M&A, we want to increase what we do in equities.”
On High Commodity Costs Hurting Rate Cut Prospects – World Bank’s Chief Economist Indermit Gill
“A key force for disinflation — falling commodity prices — has essentially hit a wall… a major energy shock could undermine much of the progress in reducing inflation”