IIFL, MTR, Commerzbank Launch Bonds; UBS, Santander, Cemex and others Price Bonds

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June 3, 2026

Credit Ratings
Macro News

US Treasury yields were broadly stable across the curve. On the geopolitical front, reports indicated that the US struck Iran’s Qeshm islands. In retaliation, Iran fired missiles at Kuwait and Bahrain. Brent crude moved higher by about 2% on the back of the escalations.

Looking at equity markets, the S&P and Nasdaq ended marginally higher. US IG CDS spreads tightened by 0.4bp and HY CDS spreads tightened by 0.9bp. European equity markets ended higher. European IG CDS spreads were 0.7bp tighter and Crossover spreads tightened by 4.7bp. Asian equity markets have opened broadly weaker this morning. Asia ex-Japan CDS spreads tightened by 1bp.

New Bond Issues

IIFL Finance $ 3.25Y social bond at 7.9% area
MTR € 8Y/12Y/20Y at MS+65bp/90bp/125bp areas
Commerzbank A$ 5Y/5Y FRN at ASW/3m BBSW+120bp/120bp areas
Hong Kong Telecommunications $ 10Y at T+110bp area

UBS raised $1.5bn via a PerpNC6.5 AT1 bond at a yield of 6.875%, 62.5bp inside initial guidance of 7.50% area. The junior subordinated note is rated Baa3/BBB-/BBB. If not called by 5 December 2032, the coupon will reset to the 5Y SOFR Mid-Swap plus 309bp. Below is a table comparing the latest issuance with its peers.

Santander Holdings USA raised $2.5bn via a three-trancher. It raised:

$1bn via a 4NC3 bond at a yield of 5.04%, 25bp inside initial guidance of T+120bp area
$750mn via a 6NC5 bond at a yield of 5.22%, 25bp inside initial guidance of T+130bp area
$750mn via a 11NC10 bond at a yield of 5.701%, 25bp inside initial guidance of T+150bp area

The senior unsecured notes are rated Baa2/BBB+/A-. Proceeds will be used for general corporate purposes.

Cemex raised $1.5bn via a 10Y bond at a yield of 5.807%, 27.5bp inside initial guidance of T+162.5bp area. The senior unsecured note is rated BBB-/BBB-. Proceeds will be used for general corporate purposes, including repayment of debts and other financial obligations.

Credit Agricole raised £650mn via a long 7NC6 bond at a yield of 5.514%, 15bp inside initial guidance of T+115bp area. The senior non-preferred note is rated A3/A-/A. Proceeds will be used for general corporate purposes.

BPCE raised $600mn via a 5Y FRN at SOFR+100bp, 15bp inside initial guidance of SOFR+115bp area. The senior preferred note is rated A2/A+/A+. Proceeds will be used for general corporate purposes.

New Bonds Pipeline

Danantara potential $ bond offering
Adelaide Airport A$ 7Y bond

Rating Changes

LG Electronics Upgraded To ‘BBB+’ On Improving Profitability; Outlook Stable
China Hongqiao Upgraded To ‘BB+’ from ‘BB’ On Improving Operating Conditions; Outlook Stable
Moody’s Ratings affirms Kutxabank’s senior unsecured debt rating and changes the Outlook to Negative

Term of the Day: Senior Non-Preferred (SNP) Bond

Senior non-preferred (SNP) notes are type of debt security that banks issue as part of their Tier 3 capital. These bonds have an inherent bail-in feature where in the case of bankruptcy, creditors holding these notes may be subject to conversion into shares. In a liquidation scenario, SNP bonds are ranked higher than Subordinated Bonds. However, they rank inferior to Senior Preferred Bonds or Senior Unsecured Bonds.

Talking Heads

On Warning of a Shrinking Balance Sheet in Lookback at Powell Era

Christina Romer and David Romer, University of California

“There may be changes that would pass a cost-benefit test that would shrink the Fed’s balance sheet somewhat… there would be substantial downsides and no significant upsides to attempts to shrink its size greatly… One aspect of the Fed’s current balance sheet, however, seems harder to justify: its large holdings of mortgage-backed securities”

On Treasury Yields Driven by Fed Bets, Not AI, for Now – Lotfi Karoui, Pimco

“Structural pressures from the AI buildout are real, but they are growing slowly, not driving the yield moves investors are watching right now. Cyclical factors still support the hedging role of bonds… AI-related credit expansion, wider fiscal deficits, and persistent external imbalances do not mean that US Treasuries have lost their hedging role”

On Fed May Need to Act Soon Against High Inflation – Beth Hammack, Cleveland Fed President

“For today, it’s reasonable to keep rates steady given the uncertainties around the economic outlook… if recent data trends continue, it may soon be appropriate for policy to act to address the growing risks of persistently elevated inflation.”

Top Gainers and Losers- 03-Jun-26*