This site uses cookies to provide you with a great user experience. By using BondbloX, you accept our use of cookies.
Treasuries traded stable across the curve. Initial jobless claims for the previous week continued to indicate a slowdown in the labor market, coming at 238k, worse than expectations of a 235k print. Chicago Fed’s President Austan Goolsbee said that the recent inflation reading were “very encouraging — looking much more like the second half of last year, around 2%”. Thus he added that the Fed could cut rates if inflation continues to cool akin to last month. Atlanta Fed’s President Thomas Barkin on the other hand, said that he would need “more conviction before moving”. Looking at equity markets, S&P and Nasdaq closed lower by 0.3% and 0.8% respectively. US IG and HY CDS spreads widened 1.1bp and 5bp respectively.
European equity indices were higher. Among credit markets, the iTraxx Main and Crossover spreads were tighter by 1.4bp and 7bp respectively. Asian equity indices have opened lower this morning. Asia ex-Japan CDS spreads were 0.2bp tighter. Japan’s inflation rose last month, with the headline and core indicators at 2.8% and 2.5%, higher than the previous 2.5% and 2.2% print respectively. Analysts now believe that the inflation readings could provide a case for the BOJ hike rates.
FWD raised $600mn via a 7Y bond at a yield of 7.635%, 45bp inside initial guidance of T+380bp area. The senior unsecured notes are rated Baa3/BBB- (Moody’s/Fitch), lower than the issuer’s rating of Baa2/BBB+. Proceeds will be used for general corporate purposes.
Bank of East Asia raised $650mn via a 10NC5 Tier 2 bond at a yield of 6.842%, 35bp inside initial guidance of T+290bp area. The subordinated notes are rated Baa2/BBB-. Proceeds will be used for general corporate purposes, including but not limited to refinancing of its $600mn 6.375% Perps. The loss absorption in a non-viability event involves a permanent write-off (in whole or part) of principal and/or interest. A non-viability event would occur if (a) HKMA believes that a write-off or conversion is necessary (b) government body, government officer or a relevant regulatory body decides that public-sector injection of capital or equivalent support is necessary.
Bocom Leasing raised $650mn via a two-tranche green issuance. It raised $300mn via a 3Y bond at a yield of 5.106%, 43bp inside initial guidance of T+105bp area. It also raised $350mn via a 3Y FRN at SOFR+68bp vs. initial guidance of SOFR+115bp area. The senior unsecured bonds are rated A3/A (Moody’s/Fitch). Proceeds will be used to finance and/or refinance eligible green projects as defined under “Clean Transportation (General)” and “Renewable Energy” of its sustainable finance framework.
Brazil raised $2bn via a long 7Y sustainability bond at a yield of 6.375%, 25bp inside initial guidance of 6.625% area. The bonds are rated Ba2/BB/BB. Proceeds will be used to repay outstanding federal public debt, besides financing and/or refinance eligible green and/or social projects applicable under Brazil’s Sovereign Sustainable Bond Framework. The new bonds are priced at a new issue premium of 23.5bp over it existing 3.75% 2031s that yield 6.14%.
This is an event when the regulators/relevant authorities determine that the company under consideration may be non-viable or may not remain a going concern unless measures are taken to revive its operations given financial difficulties. Once the regulators determine that the company would be non-viable, it would trigger an action where for example, the company would have a right to irrevocably write-off (partly or fully) the outstanding principal of the bonds and make this portion non-payable henceforth. It could also include accrued and unpaid interest/dividends being unpayable. Thus, in this case, the regulator determines that without a write-off, the issuer would become non-viable and without a public sector injection of capital or other equivalent support, the issuer would become non-viable.
On Erdogan Winning Over Foreign Investors, But Citizens Paying the Price
David Austerweil, PM of EM at Van Eck Associates
“Investors are more convinced than the average citizen of the country, as they face the burden of inflation, which is normal… Inflation seems more like a political issue”
On Swiss regulations not yet tough enough post-Credit Suisse – SNB
“The current capitalisation of the combined UBS parent bank is stronger than that of the Credit Suisse parent bank before the crisis… the weaknesses of the current regime remain… regulatory ratios remain to a large extent a static measure and should be complemented by elements that contain forward-looking components”
On betting on Europe despite political uncertainty – Citi’s Ignacio Gutierrez-Orrantia
“Volatility and lack of visibility due to the upcoming elections in the UK and France are causing doubts among investors… With all this political uncertainty happening in Europe, opportunities may arise (from a business perspective)”
Boeing 737 Max crash victims’ families ask the DOJ to fine the planemaker $25bn