Xiaomi, Zhejiang Expressway Launch $ Bonds; Macro; Rating Changes; New Issues; Talking Heads; Top Gainers & Losers

US Markets were mixed as the S&P was down 0.2%, snapping its 7-day winning streak while NASDAQ, was up 0.2%, at a new record. The June ISM Services index in the US dropped to 60.1 from May’s record high of 64.0 and lower than the forecasted 63.5. US business output continued to expand at the third-fastest rate since October 2009. Real Estate, Consumer Discretionary and IT were up 0.9%, 0.8% and 0.4%, pulling the bourses up while Energy, Financials and Materials down 3.2%, 1.6% and 1.4% pushed them lower. US 10Y Treasury yields dipped 9bp to a four month low of 1.35%. Eurostat eurozone retail sales rose by more than expected in May. However, German economic sentiment hit its lowest since January, with the ZEW survey at 63.3 in July, lower than the forecasted 75.2. European markets slid across – DAX, FTSE and CAC were down ~1.0%. US IG and HY CDS spreads widened 0.7bp and 4.3bp respectively.  EU main and crossover CDS widened 1bp and 6.6bp respectively. Saudi TASI and Abu Dhabi’s ADX were down 0.3% and 0.2% respectively. Brazil’s Bovespa was down 1.4% higher. Asian markets opened in the red – HSI, Singapore’s STI and Nikkei were down 1.1%, 0.9% and 0.8% while Shanghai was largely flat. Asia ex-Japan CDS spreads were 1bp wider. Chinese property developers’ bonds, including Evergrande, Risesun, Kaisa and Sunac witnessed a sharp fall late on Tuesday. Sri Lanka’s bonds also made it to the losers list on the overall risk-off sentiment.

• Xiaomi $ 10Y/30Y bonds at T+200bp/T+260bp areas

• Zhejiang Expressway $ 5Y bond at T+130bp area

• China Modern Dairy Holdings $ 5Y bond at T+170bp area

• Shenwan Hongyuan Securities $ 5Y bond at T+160bp area

REC raised $400mn via a 5.5Y bond at a yield of 2.771%, 32.5bp inside initial guidance of T+225bp. The bonds have expected ratings of Baa3/BBB-. Proceeds will be used to finance power projects. There is a change of control put at 100 if the Indian government or a government entity ceases to own, directly or indirectly, more than 50% of the voting rights of the company. REC in February issued a $500mn 2.25% bond due 2026, its eighth issuance in the international bond markets, at a yield of 2.303%. The new bonds were priced at a new issue premium of 16bp over their existing 2.25% bonds due September 2026 that yield 2.61%.

Mexico raised €1.25bn ($1.48bn) via 15Y social bond at a yield of 2.259%, 25bp inside initial guidance of Mid-Swaps+220bp area. The bonds have expected ratings of Baa1/BBB/BBB-. Proceeds will be used for general sovereign financing and on budgetary resources to fund budgetary programs that qualify as eligible Sustainable Development Goals (SDG) expenditures under the SDG Sovereign Bond Framework.

Sharjah raised $750mn via a 10Y Sukuk at a yield of 3.2%, 30bp inside initial guidance of 3.5% area. The bonds have expected ratings of Baa3/BBB-. This is Sharjah’s second offering this year following their $1.25bn two-trancher comprising a 12Y and 30Y bond in March. Proceeds will be used to plug its deficit projected to edge down slightly to $2.04bn in 2021 from $2.12bn last year.

Sino-Ocean Group raised $320mn via a 3.5Y green bond at a yield of 2.7%, 35bp inside initial guidance of T+270bp area. The notes have expected ratings of Baa3/BBB– and received orders of over $1.5bn, 4.7x the issue size. Sino-Ocean Land Treasure IV is the issuer and Sino-Ocean Group is the guarantor. Proceeds will be used to repay mid to long-term external debt of the guarantor and/or its subsidiaries due within one year, in accordance with a green finance framework. The bonds were priced just inside its 6% bonds due July 2024 that yield 2.74% in secondary markets.

Minerva raised $400mn via a tap of their 4.75% 2031s at a yield of 4.75% as compared to initial guidance in the high 4% area. The bonds are rated BB/BB. Proceeds will be used to prepay existing debt and the issuance is part of liability management efforts aimed at stretching its debt profile. The tap was priced 32bp over its initial 4.75% 2031s that yield 4.43%.

Hyundai Assan Otomotiv Sanayi raised $300mn via a 5Y bond at a yield of 1.709%, 30bp inside initial guidance of T+115bp area. The bonds have expected ratings of Baa1/BBB+ and received orders over $1.15bn, 3.8x issue size. Proceeds will be used for general corporate purposes. The bonds are guaranteed by Hyundai Motor Corp. Asia took 95% and EMEA 5%. Asset/fund managers bought 50%, banks 26%, insurers/sovereigns/supranationals and agencies/sovereign wealth funds 22% and private banks 2%.

Nomura raised $3.25bn via a three-trancher. It raised:

• $1.25bn via a 5Y at a yield of 1.653%, 25bp inside initial guidance of T+110bp area
• $1bn via a 7Y at a yield of 2.172%, 25bp inside initial guidance of T+130bp area
• $1bn via a 10Y at a yield of 2.608%, 25bp inside initial guidance of T+150bp area

The bonds have expected ratings of Baa1/BBB+. The new issuance comes roughly four months after they unwound a $3.25bn three-trancher after it got priced, due to expected losses arising out of Archegos Capital. The unwound offering comprised a $1.25bn 5Y at T+105bp, a $750m 7Y at T+120bp, and a $1.25bn 10Y at T+130bp.

Korea Gas raised $800mn via a dual-tranche bond offering. It raised $450mn via a 5Y bond at a yield of  1.187%, 32.5bp inside guidance of T+70bp area. It also raised $350mn via a 10Y bond at a yield of 2.02%, 30bp inside  guidance of T+95bp areas. The bonds are rated Aa2/AA/AA-, received combined orders of over $3.15bn, 3.9x issue size. The 5Y bonds received orders over $1.45bn, 3.2x issue size. Asia took 75%, EMEA 23% and the US 2%. Central banks and sovereigns, supranationals and agencies bought 37%, asset/fund managers  32%, banks and private banks 23% and insurers and pension funds 8%. The 10Y received orders over $1.7bn, 4.9x issue size. Asia took 64%, EMEA 6% and the US 30%. Asset/fund managers took 51%, banks and private banks 25%, central banks and sovereigns, supranationals and agencies 12% and insurers and pension funds 12%. Proceeds will be used for general corporate purposes. Its 3.5% 2026s and 2.25% 2026s maturing in July 2026 yielded 1.19% and were trading at 101.14 and 105.04 respectively.