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Bond Market News
Macro; Rating Changes; New Issues; Talking Heads; Top Gainers and Losers
March 2, 2022
US equity markets ended lower on Tuesday with the S&P and Nasdaq ending 1.6% lower each. Sectoral losses were led by Financials and Materials, down 3.7% and 2.3%. European markets were sharply lower – DAX, CAC and FTSE crashed 3.9%, 3.9% and 1.7%. US 10Y Treasury yields eased 10bp to 1.75%. Brazil’s Bovespa was up 1.4%. In the Middle East, UAE’s ADX was up 2.2% and Saudi TASI was up 0.7%. Asian markets have opened with a positive bias – Shanghai, HSI, STI and Nikkei are down 0.4%, 1.1%, 0.5% and 1.9% respectively. US IG CDS spreads widened 4bp and HY spreads were 34.2bp wider. EU Main CDS spreads were 5.8bp wider and Crossover CDS spreads were a 12.8bp wider. Asia ex-Japan CDS spreads were 2.3bp tighter.
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New Bond Issues
American Express raised $4bn via a three-trancher. It raised:
- $1.75bn via a 3Y fixed-rate bond at a yield of 2.285%, 25bp inside initial guidance of T+105bp area
- $500mn via a 3Y FRN at SOFR+93bp as compared to initial guidance of SOFR equivalent area
- $1.75bn via a 5Y bond at a yield of 2.57%, 25bp inside initial guidance of T+125bp area
The bonds are rated A2/BBB+. Proceeds will be used for general corporate purposes. The company dropped its planned 5Y FRN tranche while launching the bond.
Charles Schwab raised $3bn via a three-trancher. It raised:
- $1.5bn via a 5Y bond at a yield of 2.473%, 25bp inside initial guidance of T+115bp area
- $500mn via a 5Y FRN at SOFR+105bp as compared to initial guidance of SOFR equivalent area
- $1bn via a 10Y bond at a yield of 2.926%, 25bp inside initial guidance of T+145bp area
The bonds are rated A2/A. Proceeds will be used for general corporate purposes.
New Bonds Pipeline
- Honda Motor hires for $ green bond
- Mumbai International Airport hires for $ bond
- The Republic of the Philippines hires for $ bond
- Aluminium Corporation of China hires for $ bond
- Petron hires for $ 7NC4 bond
- Electricity Generating (EGCO) hires for $ 7Y or 10Y bond
Rating Changes
- Fitch Downgrades 7 Ukrainian Banks to ‘CCC-‘
- Russian VEB.RF And Sub. Rtgs Cut To ‘BB+’ And Put On CreditWatch Neg After Similar Action On Russia; Rtgs Then Suspended
- Kazakhstan-Based SB Alfa-Bank JSC ‘BB’ Ratings Placed On CreditWatch Negative On Parent’s Deteriorating Creditworthiness
- Siemens Energy Outlook Revised To Negative; ‘BBB/A-2’ Ratings Affirmed
Term of the Day
Short Interest
Short interest refers to the number of open positions of shares/units that have been sold short. Open positions sold short refers to borrowing and selling shares/units but not yet repurchasing them back to close the trade. Short interest is looked at as an indicator of bearishness in the market where an increased number of short interest would indicate a more bearish view on markets.
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Talking Heads
On Growth Angst Shaking Markets Already Obsessed With Inflation Risk
Bloomberg Intelligence’s Mike McGlone
“What the market is doing now is pricing in for that increasing risk of a global recession and spiking energy, spiking commodity prices will aggravate that”
Alicia Levine, head of equities and capital markets advisory for BNY Mellon Wealth Management
“You have that specter of the late 1970s, early 1980s of that stagflationary fear of ever-ratcheting-down growth and ever-ratcheting-up inflation. And what this conflict does is it plays into the inflationary piece”
Michael Shaoul, chief executive of Marketfield Asset Management
“One of the stranger arguments made in recent weeks has been the claim that the U.S. economy is on the verge of rolling over, or that we are entering a period of ‘stagflation”
On Argentina Reaching a Deal With IMF Staff, President Says
“The Argentine government has now reached an agreement with the staff of the International Monetary Fund to put forward a program that lets us refinance the debt. It’s an agreement without austerity policies and with increases in real spending in every year of the program.
On Russia default ‘extremely likely’ if Ukraine crisis worsens -Banking lobby
Elina Ribakova, a global banking industry lobby group’s deputy chief economist
“If we stay here and this (the crisis) escalates, then default and restructuring is likely”
On Investors betting Ukraine crisis will slow pace of ECB and Fed tightening
Antoine Bouvet, a rates strategist at ING
“There’s a big dovish repricing going on. The market has taken the view that the implications from Ukraine are that the ECB and other central banks will move more slowly.”
Rick Rieder, CIO of global fixed income at BlackRock
“This also has a significant impact on growth globally and in the US. This is clearly going to keep inflation high for a longer period of time. But much of these dynamics are not in the Fed’s control.”
Fabio Panetta, an ECB executive board member
“It would be unwise to pre-commit on future policy steps until the fallout from the current crisis becomes clearer”
Top Gainers & Losers – 02-Mar-22*
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