ISM Services Tops Estimates; Keppel Launches S$ PerpNC3

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June 4, 2026

Credit Ratings
Macro News

US Treasury yields inched higher by ~2bp across the curve. The US ISM Services PMI for May rose to 54.5, better than expecations of 53.8 and April’s 53.6 print. This was led by a jump in new orders, even as prices paid and employment eased slightly. On the geopolitical front, reports indicated an exchange of military strikes between the US and Iran, as concerns over a potential deal rose. Crude oil prices moved higher by nearly 2% on the back of the escalations. In a latest update, Israel, Lebanon agreed to conditional ceasefire.

Looking at equity markets, the S&P and Nasdaq ended lower by 0.7% and 0.9% respectively. US IG CDS spreads widened by 0.8bp and HY CDS spreads widened 5.3bp. European equity markets ended lower. European IG CDS spreads were 1bp wider and Crossover spreads widened by 4.8bp. Asian equity markets have opened weaker this morning. Asia ex-Japan CDS spreads widened by 1.5bp.

New Bond Issues

Keppel S$ PerpNC3 at 3.6% area
OCBC (Sydney Branch) A$ 3Y FRN at 3m BBSW+65bp area

Bahrain raised $1bn via a 10Y bond at a yield of 7.125%, 37.5bp inside initial guidance of 7.50% area. The senior unsecured note is rated B/B (S&P/Fitch). The issuance is the first public-market sovereign deal from the Middle East region since the war began in late-February. The new bond is priced at a new issue premium of 17.5bp over its existing 7.5% 2036 that currently yields 6.95%.

IIFL Finance raised $500mn via a 3.25Y social bond at a yield of 7.6%, 30bp inside initial guidance of 7.9% area. The senior secured note is rated B+/B+ (S&P/Fitch), and has a change of control put at 101. Proceeds will be used in accordance with its social finance framework for onward lending and supporting growth of its business.

Fairfax Financial raised $750mn via a 30Y bond at a yield of 6.2%, 20bp inside initial guidance of T+140bp area. The senior unsecured note is rated Baa2/A-/BBB+. Proceeds will be used for general corporate purposes.

Hong Kong Telecommunications (HKT) raised $650mn via a 10Y bond at a yield of 5.219%, 27bp inside initial guidance of T+110bp area. The note is rated Baa2/BBB (Moody’s/S&P) and guaranteed by HKT Group Holdings and and Hong Kong Telecommunications HKT Ltd. Proceeds will be used for general corporate purposes, including the repayment of existing debts.

MTR raised €3bn via a green three-trancher. It raised:

€1bn via an 8Y bond at a yield of 3.322%, 32bp inside initial guidance of MS+65bp area
€1bn via a 12Y bond at a yield of 3.744%, 30bp inside initial guidance of MS+90bp area
€1bn via a 20Y bond at a yield of 4.222%, 30bp inside initial guidance of MS+125bp area

The senior unsecured notes are rated Aa3/AA+. Proceeds will be used to fund eligible green investments according to its sustainable finance framework.

Commerzbank raised A$1bn via a two-trancher. It raised A$700mn via a 5Y FRN at 3mBBSW+110bp, 10bp inside initial guidance of 3mBBSW+120bp area. It also raised A$300mn via a 5Y bond at a yield of 5.694%, 10bp inside initial guidance of SQ ASW+120bp area. The senior preferred notes are rated A2/A (Moody’s/S&P).

New Bonds Pipeline

Danantara $ bond
Oncor A$ 7Y and/or 10Y senior secured $ bonds
Engie inaugural A$ 5Y and/or 10Y, PerpNC6 bonds

Rating Changes

Fitch Upgrades Maldives to ‘CCC-‘
Moody’s Ratings upgrades Alsea’s ratings to Ba2; changes outlook to stable
Fitch Upgrades National Grid to ‘BBB’ and NGET to ‘A-‘; Senior Unsecured to ‘BBB+’ and ‘A’
Moody’s Ratings upgrades Codere to Caa1; outlook positive
International Flavors & Fragrances Inc. Upgraded To ‘BBB’ From ‘BBB-‘ On Steady Leverage; Outlook Stable
Fitch Downgrades VMO2 to ‘B+’; Outlook Stable
Moody’s Ratings downgrades Nordic Paper’s CFR to B2, negative outlook
Fitch Revises Uzbekistan’s Outlook to Positive; Affirms at ‘BB’
Exxon Mobil Corp. Outlook Revised To Positive From Stable On Forecast Sustained Strong Credit Performance
Chalco Outlook Revised To Positive; ‘BBB’ Rating Affirmed; SACP Revised Upward To ‘bbb’

Term of the Day: New Issue Premium

A new issue premium refers to the incremental higher yield (yield premium) on an issuer’s newly issued bond over bonds by the same issuer with a similar maturity. A newly issued bond by an issuer typically offers a higher yield to its own comparable bond to entice investor demand in the security. Sometimes, if an issuer does not have a comparable bond with a similar maturity, but does have a yield curve (i.e., other bonds issued across different maturities), analysts can interpolate and arrive at an estimated yield for a hypothetical comparable. However, while new issue premiums are typically the case, it is not necessary that an issuer’s new bond would always have a new issue premium.

Talking Heads

On No Obvious Direction Ahead for Rates – John Williams, New York Fed President

“Monetary policy is exactly in the right place. I don’t see any need to raise or lower interest rates right now. I also don’t see an obvious kind of direction where we would go in the future… Right now I’m not that worried about dramatic, second-round effects or persistent inflation”

On AI Bubble Is Coming to Credit Markets – Robert Cohen, DoubleLine

“What’s the probability that we will be in an AI bubble? I’ll put maybe 100% on that… At the right spread I can easily be bribed to go into some of these higher quality credits”… valuations (in equities) may be getting more stretched now.

On Software Refinancing & AI Spending

Na Wei, Barclays

“They are using this time wisely to create AI strategies on both the defense and offense”

Susan Kasser, Neuberger Berman

“Expertise in software is a defining quality for them. They are using this time wisely to create AI strategies on both the defense and offense”

Christina Lee, Oaktree Capital Management

“We’re not saying its a bad industry, we’re saying we need to be selective. We’re watching it carefully and just knowing where we stand its hard to say, ‘hey, let’s be aggressive”

Top Gainers and Losers- 04-Jun-26*