Nanyang Commercial Bank Prices $ Tier 2; Netflix Prices First IG Issuance

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July 31, 2024

Credit Ratings
Macro News

US 2Y Treasury yields were down 3-5bp. The US Treasury reduced the estimate for its net borrowing for the current quarter at $740bn vs. its previous prediction of $847bn. It also projected the government’s cash buffer to decline toward year-end. US JOLTS job openings for June rose to 8.184 million vs. the surveyed 8 million, albeit lower than the prior month’s 8.23 million print. US equities fell with the S&P and Nasdaq down 0.5% and 1.3% respectively. US IG and HY CDS spreads widened by 0.9bp and 1.4bp respectively.

European equity markets ended mixed. Looking at European CDS spreads, the iTraxx Main and Crossover spreads widened by 0.4bp and 2.1bp respectively. Asian equity indices have opened in the green this morning. Asia ex-Japan CDS spreads were wider by over 0.6bp.

New Bond Issues

Citibank NA raised $4bn via a three-part deal. It raised:

$1.5bn via a 2Y bond at a yield of 4.929%, 23bp inside initial guidance of T+80bp area
$1bn via a 2Y FRN at SOFT+70bp vs. initial guidance of SOFR equivalent
$1.5bn via a 5Y bond at a yield of 4.838%, 20bp inside initial guidance of T+100bp area

The senior bank notes are unrated. Proceeds will be used for general corporate purposes.

Netflix raised $1.8bn via a two-tranche deal. It raised $1bn via a 10Y bond at a yield of 4.949%, 30bp inside initial guidance of T+110bp area. It also raised $800mn via a 30Y bond at a yield of 5.414%, 30bp inside initial guidance of T+130bp area. The senior unsecured bonds are rated Baa1/A. Proceeds will be used for the maturity repayment of their outstanding 5.875% 2025s, 3% 2025s and 3.625% 2025s, and for general corporate purposes. This is Netflix’s first issuance as an investment grade issuer, after having become a rising star following rating upgrades last year.

Nanyang Commercial Bank raised $700mn via a 10NC5 Tier 2 bond at a yield of 6.133%, 40bp inside initial guidance of T+250bp area. The subordinated bonds are rated Baa2. The bonds can be redeemed early at par upon any withholding tax event, tax deduction event or capital event, subject to the prior written approval of the monetary authority. Upon a non-viability event, the issuer shall reduce the then outstanding principal and cancel any accrued but unpaid interest by an amount equal to the non-viability event write-off amount.

Rating Changes

Fitch Upgrades Telecom Italia to ‘BB’ on Fixed Network Disposal Closing
MicroStrategy Inc. Upgraded To ‘B-‘ From ‘CCC+’ On Improved View on Bitcoin; Outlook Stable
Fitch Upgrades Manulife’s Ratings; Outlook Stable

Term of the Day

JOLTS Job Openings

This is a survey number collected by the BLS, measuring the number of job vacancies on the last business day of the month in question. This helps give a more detailed picture of the labor market in the US, besides the typical Non-Farm payrolls (NFP), ADP Payrolls, weekly jobless claims and other metrics. A job is open if it meets all three of the following conditions:

– A specific position exists and there is work available for it

– The job could start within 30 days, whether or not the establishment finds a suitable candidate

– There is active recruiting for workers from outside the establishment location that has the opening

Talking Heads

On Bond investors see ‘dovish hold’ from Fed, piling on yield curve steepeners

Greg Wilensky, head of U.S. fixed income at Janus Henderson

“The yield curve moved a significant amount in the last six weeks, but we are at these levels in October last year and it still comes down to an inverted curve, which is not normal”

On ECB Having Much More Data at September Meeting – GC Member, Boris Vujcic

“We are now waiting for September when we will have much more data. Then we will have new projections and make a decision on interest rates… not likely the rate will go up, it will either stay at the same level or go down”

On Up to Two Fed Cuts in 2024, Reversing Hold Stance – Goldman’s David Solomon

“One or two cuts in the fall seems more likely… what’s been kind of a long inflationary pressure, even though it’s moderating, is having an effect on consumer habits… still unclear is the trajectory of the economy over the next 12 to 18 months”