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Bond Market News

Turkey Prices $ 10Y at 7.875%

February 9, 2024

US Treasury yields continued to inch higher on Thursday with the 10Y up 5bp. US initial jobless claims fell for the first time in three weeks by 9k to 218k in the week ended February 3, below estimates of 220k. Looking at credit markets, US IG and HY CDS spreads tightened 0.2bp and 2bp respectively. S&P rose 0.1% and Nasdaq rose 0.2%

European equity markets ended mixed. Credit markets in the region saw the European main CDS spreads tighten by 0.4bp and crossover spreads tightened by 1.9bp. Asian equity markets have opened mixed today. Asia ex-Japan IG CDS spreads widened by 1.1bp.

 

 

New Bond Issues

New Bond Issues 9 Feb 24

 

Turkey raised $3bn via a long 10Y bond at a yield of 7.875%, 50bp inside initial guidance of 8.375% area. The bonds are rated B3/B (Moody’s/Fitch). The new bonds are priced at a new issue premium of 24.5bp over its existing 8% bonds due February 2034 that currently yield 7.63%.

Wynn Resorts raised $400mn via a tap of its 7.125% 2031s at a yield of 6.57%. The senior unsecured bonds are rated B1/BB-. Proceeds from this, along with cash contributed by the company and/or borrowings under its senior credit facilities, and cash will be used (a) to repurchase up to $800mn of Wynn Las Vegas and Wynn Las Vegas Capital’s outstanding 5.5% 2025s that are validly tendered and accepted under its tender offer and (b) for general corporate purposes.

 

New Bond Pipeline

  • Daewoo Engineering & Construction hires for S$ bond
  • Greenko Mauritius hires for $ bond
  • Korea Housing Finance Corp hires for $ bond 

 

Rating Changes

  • Royal Caribbean Cruises Ltd. Upgraded To ‘BB+’ On Favorable Bookings And Pricing, Expected Deleveraging; Outlook Stable
  • Moody’s downgrades Intel’s senior unsecured rating to A3; outlook stable 
  • Fitch Downgrades Credivalores’ IDR to ‘C’ as it Enters Grace Period

Term of the Day

Fallen Angel

A fallen angel is a company or sovereign whose credit rating has been cut from investment grade to junk due to deteriorating financial conditions of the company. The downgrade to junk may have a negative impact on its bond prices as asset managers that are mandated to hold only investment grade debt may be forced to sell off their holdings in the fallen angels. UPL is an example wherein, it got downgraded from investment grade to high yield by Moody’s at Ba1.

 

Talking Heads

On China property defaults won’t stop banks lending to cash-strapped developers – Goldman Sachs

“Many of the losses have already been taken… This highlights policymakers’ focus on addressing the ‘flow’ credit issues, directing much of the credit easing towards financing for the completions of pre-sold but uncompleted homes… do not believe that improving credit supply to the property developers in and of itself will be sufficient to revive the sector”

On Global Share Buybacks Returning as Stocks Hit Records

 

Matt Maley, chief market strategist at Miller Tabak + Co.

‘It does tell you that management is getting more confident about where the economy is headed… should be seen as somewhat constructive indicator”

Jeff Rubin, Birinyi’s director of research

“… many companies’ stock prices have continued to languish and as a result buying back the stock is an indication from these companies that they see their stock as a good value”

On seeing more commercial real estate stress, losses, but no systemic banking risk – US Treasury Secretary Janet Yellen

“Valuations are falling. And so it’s obvious that there’s going to be stress and losses that are associated with this… I hope and believe that this will not end up being a systemic risk to the banking system. The exposure of the largest banks is quite low”

 

Top Gainers & Losers- 09-February-24*

BondEvalue Gainer Losers 9 Feb 24

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