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US Treasury yields continued to move higher across the curve by 4-5bp. The US Treasury’s 30Y auction saw solid demand with a bid-to-cover ratio of 2.47x, higher than the 2.4x seen last month, and at a yield of 4.331%. This is in contrast to a weaker 10Y auction a day prior that saw a 2.51x demand vs. 2.56x a month prior, at a yield of 4.166%. However, the 3Y note received strong interest with a bid-to-cover ratio of 2.6x at a yield of 4.256% and a strong indirect bidders’ participation of 70%. Credit markets saw US IG CDS spreads tighten 0.4bp and HY spreads tighten by 1.2bp. Looking at equity indices, S&P and Nasdaq fell 0.2% and 0.5% respectively.
European equity indices closed higher. European IG CDS spreads tightened 0.9bp and HY spreads were 4.9bp tighter. Asian equity markets have opened mixed today. Asia ex-Japan IG CDS spreads were 0.4bp wider.
Aston Martin raised ~$1.47bn via a two-part multicurrency deal. It raised £400mn via a 5NC2 bond at a yield of 10.375%, ~50bp inside initial guidance of 10.75-11% area. It also raised $960mn via a 5NC2 bond at a yield of 10%, ~37.5bp inside initial guidance of 10.25-10.5% area. Both notes are rated B3/B-/B, and have a change of control put at 101. Proceeds, alongside cash from its balance sheet will be used to refinance existing notes due 2025 & 2026, repay its drawn revolving credit facility and pay transaction related fees and expenses.
Rising stars are companies that have recently seen credit rating upgrades that pull its rating to investment grade category from its previous junk or high yield category. They are termed as rising stars as their financial and/or operational metrics show an improving trend. The opposite of rising stars are fallen angels, which are issuers that have been recently downgraded to junk category from its previous investment grade rating category.
On Corporate Bond Rush Breaking Down a Maturity Wall That Everyone Feared
Viktor Hjort, global head of credit strategy at BNP Paribas
“The ‘refinancing penalty’ is still high, but significantly lower than it was last year. In the short term that makes supply more likely”
Nachu Chockalingam, Federated Hermes senior PM
Refinancing “has a bigger impact in high yield as a larger chunk is taken out”
On Inflation Resurgence Risks Upending Emerging Asian Bond Gains
Philip McNicholas, Asia sovereign strategist at Robeco Group
“These surprises have been largely led by food prices, reflecting the confluence of El Nino impacts and the Lunar New Year”
On BOJ to debate ending negative rates in March if wage survey strong
BOJ Governor Kazuo Ueda
“The outcome of this year’s annual wage negotiation is critical… seeing many companies make offers, including today. We hope to reach an appropriate decision”
Sources
“There seems to be enough factors that justify a March policy shift. In the end, it will be a judgement call by the nine board members”