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Bond Market News
Treasury Yields Surge By 10bp; MTR, Hanwha Life Issue Dollar Bonds
June 16, 2025
US Treasury yields surged by 9-10bp across the curve. On the data front, the University of Michigan Consumer Sentiment Index for June rose to 60.5, much higher than expectations of 53.6 and the prior month’s 52.2 print, marking its first improvement in six months. Importantly, the Iran-Israel conflict continued to escalate, with attacks from both sides. Israel’s PM Benjamin Netanyahu warned that its attacks may intensify. Iran partially suspended gas production at its largest gas field after a fire caused by the strikes. On the back of this, Brent crude rallied by over 12% in the previous week, with analysts noting that it might renew inflation concerns.
Looking at equity markets, the S&P and Nasdaq were both lower by 1.1% and 1.3% respectively. In credit markets, US IG CDS spreads were wider by 2.2bp and HY CDS spreads widened by 9.1bp. European equity markets ended lower too. The iTraxx Main CDS spreads widened by 1.4bp and Crossover CDS spreads widened by 5.3bp. Asian equity markets have opened mixed today. Asia ex-Japan CDS spreads were wider by 4.4bp.
New Bond Issues
- MTR $ PerpNC5.5/PerpNC10.5 at 5.375/6.125% area
- Hanwha Life $ 30NC5 at 6.75% area
Rating Changes
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Fitch Revises Iliad’s Outlook to Positive; Affirms IDR at ‘BB’
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Moody’s Ratings changes Uzbekistan’s outlook to positive from stable, affirms Ba3 rating
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Fitch Revises Domtar Corporation’s Outlook to Negative; Affirms IDR at ‘BB-‘
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Fitch Revises Outlook on GEAR to Negative, Affirm IDR at ‘B+’
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Fitch Revises San Marino’s Outlook to Positive; Affirms at ‘BB+’
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Moody’s Ratings upgrades Yes Bank to Ba2 from Ba3; changes outlook to stable
Term of the Day: Credit Default Swap (CDS)
A Credit Default Swap (CDS) is a financial contract between two counterparties that allows an investor to “swap” or offset the credit risk with another investor. CDS acts like an insurance policy wherein the buyer makes regular payments to the seller to protect itself from an issuer default. In the event of a default, the buyer receives a payout, typically the face value of the bond or loan, from the seller of the CDS as per the agreement. CDS spreads are a commonly used metric to track the market-priced creditworthiness of an issuer. A widening (increase) in CDS spreads indicates a deterioration in creditworthiness and vice-versa.
Talking Heads
On Holding Their Nerve to Ride Bumpy Emerging Market Rally – Traders
Chris Preece, Pictet
“Increasing momentum in the weaker dollar narrative and a still structurally elevated valuation for the dollar suggest there is much more room to go”
Nicolas Jaquier, Ninety One Plc.
“We are seeing flows coming back into the asset class from foreign allocators…But also domestic investors in EM generally have been very long dollar for a long time and we’re seeing a bit of a reversal of that trend.”
Anders Faergemann, PineBridge Investments
“…we can see the current developments extending further into the second half irrespective of the July 9 deadline,”
Aaron Gifford, T. Rowe Price
“The market kind of got ahead of itself…It’d be prudent for investors to take some chips off the table.”
Wim Vandenhoeck, Invesco
“You may want to restructure some trades with these potential hiccups in mind but you also want to stay the course in this asset class,”
On Sounding Corporate Debt Alarms – Jeffrey Gundlach, DoubleLine
“gradually cutting its high-yield bonds and other sub-investment-grade debt over the past two years…There are myriad risks, including inflation and tariffs, and investors aren’t getting paid for them… Spreads, or risk premiums, on US high-yield notes are around 3% now…That’s well below the two-decade average of 4.9%, and close to the lowest levels since 2007.”
On No Clarity for Fed Until at Least September – Economists
Brian Horrigan, Loomis, Sayles & Company
“With higher inflation and higher expectations of inflation, the Fed will be more cautious,”
Scott Anderson, BMO Capital Markets
“…as the unemployment rate moves further from the full employment rate level they will pivot toward supporting the economy and labor market,”
Top Gainers and Losers- 16-Jun-25*
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