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Bond Market News
US Treasury Yields Ease on Strong 7Y Note Auction; Arada, Li $ Fung Price $ Bonds
July 30, 2025
US Treasury yields dropped across the curve on Tuesday. The US 7Y note auction saw strong demand with a bid-to-cover ratio of 2.79x, significantly better than the three prior auctions’ average of 2.59x. The note came-in at a final yield of 4.092%. Separately as reported in a weekly JP Morgan client survey, net long Treasury positions were the smallest in over 2 months. At the FOMC’s meeting later today, analysts do not expect any changes in interest rates. They also do not see the Fed giving much clarity on the timing of rate cuts.
Looking at US equity markets, both the S&P and Nasdaq ended lower by 0.3% and 0.4% respectively. US IG CDS spreads were 0.7bp wider and HY CDS spreads widened by 4bp. European equity markets ended higher. The iTraxx Main CDS spreads tightened by 0.4bp while Crossover CDS spreads tightened by 3.5bp. Asian equity markets have opened mixed today. Asia ex-Japan CDS spreads were 1.6bp wider.
New Bond Issues
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Astrea 9 Class A-1 S$615mn 15Y at 3.7% area / Class A-2 $200mn 15Y at 6% area
Arada raised $450mn via a 5Y sukuk at a yield of 7.15%, ~54bp inside initial guidance of 7.625-7.750% area. The senior unsecured note is rated B1/BB- (Moody’s/Fitch). Arada Sukuk 2 Ltd is the issuer of the sukuk.
Li & Fung raised $300mn via a 3.5NC2 bond at a yield of 8.75%, 25bp inside initial guidance of 9% area. The senior unsecured note is rated Ba2/BB. The note is guaranteed by Li & Fung Trading Ltd, Product Development Partners Ltd and Lf Centennial Pte Ltd. Proceeds will be used to refinance certain existing debt. The bond has an optional redemption at par plus half of the coupon, callable in year 2. It also has an optional redemption at par plus 1/4th of the coupon callable in year 3.
New Bonds Pipeline
- Indonesia hires for A$ 5Y/10Y bond
- Binghatti hires for $ 5Y sukuk
Rating Changes
Term of the Day: Spin-Off
Spin-offs are a corporate re-organization strategy used by companies to create a new subsidiary from its parent company. The parent separates (spins-out) part of its business into a new entity and distributes shares of the new entity to its current shareholders. Spin-offs are typically carried out to increase shareholder value of the business being spun-out or to separate out a business that is no longer core to the parent’s business. Spin-offs come in different types like pure play spin-offs, equity carve outs etc.
Talking Heads
On Bank of Japan Must Increase Interest Rates – Takeshi Niinami, Suntory Holdings
“It will be the governor’s responsibility if the Bank of Japan falls behind in responding to changing economic conditions…The failure to raise rates is keeping the yen weak, which in turn is fueling soaring prices for food and other imports…Every tariff issue will be settled and then I believe the BOJ must increase interest rates.”
On Trump Getting Tariffs and Americans Getting Price Hikes
Bill George, Medtronic
“You’re going to see companies like Walmart, Amazon, and Best Buy forced to pass price increases to consumers…Main Street has yet to see the fallout from increased tariffs – and they’re going to go higher.”
Nick Hayek, Swatch CEO
“Customers wanting to splash out on an expensive watch might also buy abroad when travelling where taxes are lower…You cannot do this with cars. You cannot do this with machines. But you can do this with watches. So it’s not so problematic for us,”
“The world economy is still hurting, and it’s going to continue hurting with tariffs at that level, even though it’s not as bad as it could have been…Right now, we are not seeing a major change compared to the effective tariff rate that the U.S. is imposing on other countries…The underlying tariff is much higher than it was back in January, February. If that stays, that will weigh on growth going forward”
Top Gainers and Losers- 30-Jul-25*
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