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US Treasury yields were lower by 4-5bp across the curve on Tuesday. US PPI in April accelerated to 2.2% YoY, in-line with expectations. Looking at the MoM numbers for April, PPI accelerated 0.5% vs. expectations of 0.3%, but March’s numbers were revised lower from 0.2% to -0.1%. Separately, the current US administration has announced sweeping tariff hikes on a range of Chinese products including semiconductors, electric vehicles, certain steel and aluminum products, batteries etc. In response, the Chinese commerce ministry stated that they would take measures to safeguard their rights and interests whilst urging the US to reconsider its actions and “cancel the additional tariff measures”. S&P and Nasdaq were up 0.5-0.8%. US IG CDS spreads tightened 0.4bp and HY spreads were 1.6bp tighter.
European equity markets were higher too. Europe’s iTraxx main CDS spreads were 0.3bp wider and crossover spreads were bp wider. Asian equity indices have opened mixed this morning. Asia ex-Japan CDS spreads were 1.7bp tighter.
2 Days To Go
Ford Motor Credit raised $2.25bn via a two-trancher. It raised $1.5bn via a 3Y bond at a yield of 5.894%, 23bp inside initial guidance of of T+150bp area. It raised $750mn via a tap of its 6.125% 2034s at a yield of 6.406%, 20bp inside initial guidance of T+215bp area. The senior unsecured notes are rated Ba1/BBB-/BBB-. Proceeds will be used for general corporate purposes. It dropped a planned 3Y FRN at the launch phase of the issuance process. The new 3Y bond was priced at a new issue premium of 33bp over its existing 4.346% bonds due December 2026 that currently yield 5.56%.
NatWest raised $2.75bn via a four-trancher.
The senior unsecured notes are rated A1/A/A+. Proceeds will be used for general corporate purposes. The 3Y bond was priced 17bp tighter to its existing 5.847% bonds due March 2027 that yields 5.59%. The 5Y bond was priced 21bp tighter to its existing 4.892% bonds due May 2029 that yields 5.62%.
Air France-KLM raised €650mn via a 5Y bond at a yield of 4.80%, 40bp inside initial guidance of T+230bp area. The senior unsecured notes are rated BB+/BBB-. Proceeds will be used for general corporate purposes, including financing of the concurrent tender offer on the issuer’s €750mn 1.875% 2025s and €500mn 3.875% 2026s.
Fitch Upgrades Signet to ‘BB+’; Outlook Stable
Fitch Upgrades Pakuwon Jati at ‘BB+’on Stabilised Portfolio; Outlook Stable
Thomson Reuters Corp. Upgraded To ‘BBB+’ On Strong Operating Performance, Conservative Leverage; Outlook Stable
Business Development Companies (BDCs) are specialty finance companies that make investments in the debt and/or equity of small to mid-size companies. BDCs are typically for US-based companies and are closed-end investment companies. The companies they invest in are generally too small or troubled/risky for banks to lend to. Additionally, BDCs must make available significant managerial assistance to certain companies in which they invest.
On Funds Linked to Morgan Stanley, Blue Owl Join Bond Sales Blitz
“The debt capital markets are open and receptive to BDCs. BDCs are taking advantage of unusually placid debt markets to issue bonds on advantageous terms”
On High Interest Rates Blocking Investors From Taking Risks – Gary Cohn, Vice Chairman at IBM
“Fiscal policy and monetary policy are directly impacting how money is being spent, what money is available today… We have changed the whole mentality of the way people think about holding capital, investing capital, recirculating capital”
On Stock Rally Warning – BofA Strategist, Michael Hartnett
“Risk assets are vulnerable to more evidence of stagflation
On Traders Ready for Dollar to Drop After US Inflation Data
Kyle Chapman, FX markets analyst at Ballinger & Co.
“A cool print could ignite hopes that the Fed is back on track for a summer cut, trimming the dollar’s yield advantage… (Fed will) be looking for a few months of improved data before they can start gaining confidence”