Khazanah, Philippines, Far East, Cathay Life Price $ Bonds

This site uses cookies to provide you with a great user experience. By using BondbloX, you accept our use of cookies.

August 29, 2024

Credit Ratings
Macro News

The US Treasury curve bull steepened, with the 2Y yield down 3bp, while yields across longer dated tenors held steady. Atlanta Fed President Raphael Bostic said while it may be “time to move” on rate cuts, he would like to see further confirmation from upcoming inflation and employment data to be able to err on the side of caution. US IG CDS spreads widened by 0.7bp and HY CDS spreads widened by 5bp. Looking at US equity indices, the S&P and Nasdaq were down by 0.6% and 1.1% respectively.

European equity markets were mixed. Looking at Europe’s CDS spreads, the iTraxx Main spreads widened 0.4bp and Crossover spreads were wider by 2bp. Asian equity indices have opened lower again today morning. Asia ex-Japan CDS spreads were 0.5bp wider.

New Bond Issues

Far East Horizon raised $550mn via a 3.5Y bond at a yield of 6.077%, 35bp inside initial guidance of T+270bp area. The senior unsecured notes are rated BBB- (S&P). Proceeds may be used for working capital, general corporate purposes, and also be on-lent to subsidiaries of the issuer in China by way of an intercompany loan. The new bonds were priced 17.7bp wider to its existing 6.625% bonds due April 2027 that yield 5.90%.

Khazanah raised $1bn via a two-tranche deal. It raised $500mn via a 5Y sukuk at a yield of 4.484%, 33bp inside initial guidance of T+115bp area. It also raised $500mn via a 10Y bond at a yield of 4.759%, 33bp inside initial guidance of T+125bp area. The senior unsecured notes are rated A3/A-. Proceeds from the 5Y sukuk will be used for funding Shariah-compliant general investments and/or refinancing of company’s borrowings. Proceeds from the 10Y note will be used for general investments, debt refinancing and working capital needs.

Philippines raised $2.5bn via a three-trancher. It raised:

$500mn via a 5.5Y bond at a yield of 4.42%, 35bp inside initial guidance of T+110bp area.
$1.1bn via a 10.5Y bond at a yield of 4.798%, 30bp inside initial guidance of T+125bp area. The new bonds were priced 6.8bp wider to its existing 6.375% bonds due October 2034 that yield 4.73%.
$900mn via a 25Y sustainability bond at a yield of 5.175%, 32.5bp inside initial guidance of 5.5% area. The new bonds were priced 4.5bp wider to its existing 5.6% bonds due May 2049 that yield 5.13%.

The SEC registered notes are rated Baa2/BBB+/BBB. Proceeds will be used for general budget financing and to finance/refinance assets in line with the Republic’s sustainable finance framework.

Cathay Life raised $320mn via a 15NC10 Tier 2 bond at a yield of 5.329%, 40bp inside initial guidance of T+190bp area. The subordinated notes were rated BBB+/BBB+. Cathay Life Insurance Co Ltd/China will provide a guarantee. Proceeds will be used to supplement and strengthen the guarantor’s financial structure, capital base and to enhance its capital adequacy ratio.

New Bond Pipeline

San Miguel Global Power hires for $ bond
KHFC hires for $ 5Y bond

Rating Changes

Moody’s Ratings upgrades Pakistan’s ratings to Caa2; changes outlook to positive
Fitch Upgrades Ukrainian Railways to ‘CC’
Fitch Downgrades Hysan to ‘BBB’; Outlook Stable

Term of the Day

SEC-Registered Bonds

As the name suggests, these are bonds registered with the US Securities and Exchange Commission (SEC). These are not to be confused with 144A bonds, which are privately placed, not SEC registered and have lesser documentation and are traded among Qualified Institutional Buyers (QIBs). Given 144As are restricted securities, they have resale and transfer restrictions that are not applicable for SEC-registered securities. Besides these, they also have a few other differences like being eligible for inclusion in bond indices like Barclays Aggregate Bond Index, no investment restrictions and no private placement restrictions on communications.

Talking Heads

On Fed Embracing Gradualism, a Familiar Policy for Uncertain Times

Brett Ryan, Deutsche Bank

“Methodical, gradual, careful — those are the types of words you hear policymakers throw around when they’re turning the ship… going to be sort of a feeling-out process that they’re going to want to take a slower approach on”

Claudia Sahm, New Century Advisors

“They have a significant question around them now in terms of labor market weakening… need to start removing the restriction”

EY-Parthenon economists

“Powell appears to be more dovish than his peers”

On Interest-Rate Path Seems ‘Relatively Clear’ – ECB’s Centeno

“When we look at the data, the path for interest rates in the euro area seems relatively clear to me. We look at the trajectory of the data and not only at each data point”

On Value in Local EM Debt as Fed to Spark Yield Hunt – Pimco

“We feel that local markets have the most value. Where you’re earlier in the game and where the better value prospects are, is getting the EM central bank cutting cycles that will start opening up after the Fed starts going”