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Bond Market News
US GDP Drops; Treasury Yields Rise by 6bp
May 2, 2025
US Treasury yields rose by over 6bp across the curve. The preliminary reading for US Q1 GDP came-in at an annualized -0.3% QoQ, worse than expectations of -0.2% and the previous quarter’s 2.4% print. Separately, the PCE and Core PCE indices grew by 2.3% and 2.6% in March, broadly in-line with expectations. The ADP employment change in April came-in at 62k, softer than expectations of 115k. Separately, US Treasury Secretary Scott Bessent said that the 2Y Treasury note was signaling that the Fed should cut rates.
Looking at equity markets, the S&P was up 0.6% and the Nasdaq ended 1.5% higher. Looking at credit markets, US IG CDS spreads were wider by 0.9, while HY CDS spreads widened by 1.9bp. European equity markets ended mixed. The iTraxx Main and Crossover CDS spreads tightened by 0.3bp and 6.5bp respectively. Asian equity markets have opened broadly higher this morning. Asia ex-Japan CDS spreads were wider by 2.7bp. The BOJ held its policy rate steady at 0.5% for a second straight meeting
New Bond Issues
Bahrain raised $2.5bn via a two-trancher. It raised $750mn via a 12Y bond at a yield of 7.5%, 25bp inside initial guidance of 7.75% area. It also raised $1.75bn via a 8Y bond at a yield of 6.25%, 37.5bp inside initial guidance of 6.625% area. The notes are rated B+/B+ (S&P/Fitch) and are issued by CBB International Sukuk Programme Co WLL.
BNP Paribas raised $3.25bn via a three-trancher. It raised:
- $400mn via a 4NC3 FRN at SOFR+143bp vs. initial guidance of SOFR equivalent area
- $1.6bn via a 4NC3 bond at a yield of 4.792%, 30bp inside initial guidance of T+150bp area
- $1.25bn via a 6NC5 bond at a yield of 5.085%, 25bp inside initial guidance of T+160bp area
The senior non-preferred notes are rated A1/A+/A+. Proceeds will be used for general corporate purposes.
DP World raised $1.5bn via a 10Y sukuk at a yield of 5.633%, 30bp inside initial guidance of T+175bp area. The senior unsecured note is rated Baa2/BBB+ (Moody’s/Fitch).
Citigroup raised $5.35bn via a four-trancher:
The senior unsecured notes are rated A3/BBB+/A. Proceeds will be used for general corporate purposes.
Saudi Fransi raised $650mn via a PerpNC6 bond at a yield of 6.375%, 50bp inside initial guidance of 6.875% area. The junior subordinated note is unrated. If not called by 7 May 2031, the coupon will reset to the US 6Y Constant Maturity Treasury yield plus 252bp.
EDF raised €2.25bn via a three-trancher. It raised:
- €750mn via a 7Y bond at a yield of 3.363%, 30bp inside initial guidance of T+140bp area
- €1bn via a 12Y bond at a yield of 4.053%, 30bp inside initial guidance of T+185bp area
- €500mn via a 20Y bond at a yield of 4.756%, 30bp inside initial guidance of T+250bp area
The senior unsecured notes are rated Baa1/BBB/BBB+. Proceeds will be used in alignment with its green bond framework for related to nuclear power generation within the UK.
Rating Changes
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Fitch Upgrades Indonesia’s BNI to ‘BBB’/’AAA(idn)’; Outlook Stable
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Moody’s Ratings upgrades Netflix’s senior unsecured notes ratings to A3; outlook remains positive
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BAE Systems PLC Upgraded To ‘A-‘ On Record Order Backlogs And Improved Credit Metrics; Outlook Stable
Whirlpool Corp. Downgraded To ‘BB+’ From ‘BBB-‘; Outlook Stable
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Polaris Rating Lowered To ‘BBB-‘ On Higher Anticipated Leverage, Outlook Remains Negative
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Coronado Global Resources Downgraded To ‘B-‘ On Weak Performance And Strained Liquidity; Outlook Negative
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Community Health Systems Inc. Downgraded To ‘SD’ On Debt Repurchase
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Moody’s Ratings changes Starbucks’ outlook to negative
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Ahli United Bank Outlook Revised To Negative After Similar Action On Bahrain, ‘BBB+/A-2’ Ratings Affirmed
Term of the Day: Personal Consumption Expenditures (PCE)
Personal Consumption Expenditures (PCE) is an inflation metric measuring consumer spending on goods and services, released by the US Department of Commerce. The Fed’s preferred measure of inflation is the Core PCE – this refers to the Headline PCE after stripping out two volatile components, namely, food and energy.
The US also publishes another inflation metric, the CPI (Consumer Price Inflation), a key inflation indicator. CPI and PCE differ on four fronts: formula, weight, scope and other factors. As per the BLS, “CPI sources data from consumers, while PCE sources from businesses. The scope effect is a result of the different types of expenditures CPI and PCE track…CPI only tracks out-of-pocket consumer medical expenditures, but PCE also tracks expenditures made for consumers, thus including employer contributions. The implications of these differences are considerable.”
Talking Heads
On ‘bonds are back’ amid volatility, investor push for balance – Charles Schwab CEO – Rick Wurster
“It’s like trying to tell someone to eat their broccoli. And now broccoli and bonds are back and clients want to talk about the value of having bonds in their portfolio. And I think it’s great for long-term investors to have that balance… having a portfolio that’s a little more balanced gives them the confidence to stick with their plan”
On Wrong to Say Markets Tell Fed It Should Cut – Fmr. US Treasury Secretary, Larry Summers
“It would have been a grave mistake to have eased already, and would be a very serious error to ease at this upcoming meeting… analytically unsound to reason from the two-year to what the Fed should do… president’s advice is really misguided
On Foreign Funds Souring on US Corporate Bonds as Trump Sows Chaos
Kenichi Kuga, Japan Post Insurance
“We have to be a little more cautious. US credit market seems to have been slow to price in risks, compared with declines and volatility in equities”
Tetsuji Saito, a portfolio manager at Gunma Bank
“Credit markets usually aren’t this volatile… We’re watching spreads, but it’s a hard market to enter right now with US rates moving so sharply”
Hans Mikkelsen, TD Securities
“Some of the rhetoric out of Washington toward foreigners… US imposed massive tariffs on basically all countries… maybe not put all your eggs in one basket”
Top Gainers and Losers- 1-May-25*
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