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Bond Market News
BofA, StanChart, UBS, DB Price $ Bonds; US 10Y Auction Sees Solid Demand
May 7, 2025
US Treasury yields fell by 3-4bp across the curve, with markets awaiting the FOMC decision later today. They expect no change to its policy rates, but await guidance on the potential path forward in its monetary policy. Separately, the US and China are set to begin trade talks over the weekend. The US 10Y note auction saw solid demand, with a bid-to-cover of 2.60x and dealers taking only 8.9% of the total, as compared to the monthly average of ~13%.
Looking at equity markets, the S&P and Nasdaq were both lower by 0.8-0.9%. Looking at credit markets, US IG CDS spreads were wider by 1bp, while HY CDS spreads widened by 6.6bp. European equity markets ended broadly lower. The iTraxx Main CDS spreads tightened by 0.6bp and Crossover CDS spreads tightened by 2.7bp. Asian equity markets have opened broadly higher today. Asia ex-Japan CDS spreads were wider by 1.3bp.
New Bond Issues
BofA raised $5bn via a three-trancher. It raised:
- $750mn via a 4NC3 FRN at SOFR+111bp vs. initial guidance of SOFR equivalent area
- $2.25bn via a 4NC3 bond at a yield of 4.623%, 25bp inside initial guidance of T+110bp area
- $2bn via 11NC10 bond at a yield of 5.464%, 25bp inside initial guidance of T+140bp area
The senior unsecured notes are rated A1/A-/AA-. Proceeds will be used for general corporate purposes.
StanChart raised $1.75bn via a two-trancher. It raised $1bn via a 6NC5 bond at a yield of 5.244%, 30bp inside initial guidance of T+165bp area. It also raised $750mn via a 6NC5 FRN at SOFR+168bp vs. initial guidance of SOFR equivalent area. The senior unsecured notes are rated A3/BBB+/A, and received orders of over $4bn, 2.3x issue size. Proceeds will be used for general corporate purposes.
UBS Group raised $1.75bn via a 11NC10 bond at a yield of 5.58%, 32bp inside initial guidance of T+160bp area. The senior unsecured note is rated A3/A-/A.
Deutsche Bank NY raised $1.5bn via a 6NC5 bond at a yield of 5.297%, 30bp inside initial guidance of T+170bp area. The senior non-preferred note is rated Baa1/BBB/A-. Proceeds will be used for general corporate purposes.
Shinhan Bank raised $500mn via a 5Y social bond at a yield of 4.649%, 38bp inside initial guidance of T+110bp area. The senior unsecured note is rated Aa3/A+/A. Proceeds will be used to finance and/or refinance eligible social projects under its framework.
HSBC raised €3bn via a two-trancher. It raised €1.5bn via a 5NC4 bond at a yield of 3.313%, 25bp inside initial guidance of T+150bp area. It also raised €1.5bn via a 9NC8 bond at a yield of 3.911%, 28bp inside initial guidance of T+180bp area. The senior unsecured notes are rated A3/A-/A+. Proceeds will be used for general corporate purposes.
Lloyds raised €1bn via a 10NC5 Tier 2 bond at a yield of 4.088%, 30bp inside initial guidance of MS+220bp area. The subordinated note is rated Baa1/BBB-/A-, and received orders of over 3.5bn, €3.5x issue size.
Rating Changes
- Moody’s Ratings upgrades Bank of Cyprus’ long-term deposit ratings to A3 from Baa1, changes outlook to stable
- Moody’s Ratings upgrades Sanofi to Aa3; outlook stable
- Fitch Downgrades Azul’s Ratings to ‘CCC-‘
- Newell Brands Inc. Downgraded To ‘B+’ On Consumer Demand And Tariff Risks, Outlook Stable
- Moody’s Ratings downgrades ETESA’s ratings to Ba1; outlook negative
- Fitch Downgrades Sunnova’s IDR to ‘RD’ on Uncured Missed Interest Payment
- Office Properties Income Trust Downgraded To ‘SD’ From ‘CC’ Following Debt Exchange
- Moody’s Ratings affirms Orange’s Baa1 rating and changes outlook to stable from positive
- Continental AG Outlook Revised To Stable On Planned Auto Division Spin-Off; ‘BBB’ Rating Affirmed
New Bonds Pipeline
- Pertamina Hulu Energi hires for $ 5Y/10Y bond
- Medco hires for $ 5NC2 bond
Term of the Day: Bid-to-cover ratio
Bid-to-cover is a ratio of the number of bids or orders received for a particular security issuance vs. the amount issued. The bid-to-cover ratio indicates the demand for an issuance – higher the ratio, higher the demand and lower the ratio, lower the demand.
Talking Heads
On Pockets of US credit markets flash warnings despite upbeat tone – Amanda Lynam, BlackRock
“There are pockets that we are watching very carefully. There are companies that have less of a financial cushion, and you have to tread more carefully, because if and when we see a downshift in economic activity, they could be more vulnerable… lot of money on the sidelines and a lot of investors share, I think, a common view that fundamentals are pretty good… When you have those periods of widening, (spreads) snap back quickly because that money is getting deployed”
On Seeing Trump Cutting China Tariffs by 50% – Paul Tudor Jones, Tudor Investment
“You have Trump, who’s locked in on tariffs; you have the Fed, who’s locked in on not cutting rates… That’s not good for the stock market… Tariffs used surgically — not to the extent that, conceivably, he’s used — would have been great”
On Shift Out of US Still Limited – Brian Weinstein, BofA
“Are people making structural shifts? No. At the margin, money’s coming to Europe… goal over the next three years is to close those gaps significantly”
Top Gainers and Losers- 7-May-25*
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