Brekkie Bond Wrap

Daily Credit Wrap:

Investment Grade:
After a weak start, Asian credits saw good buying as US Treasury yields moved higher. We heard of strong demand for BBB credits like CITPAC and NOBLE. Petronas continues to be active, as spreads continued the grind tighter on spiking oil prices. Near term direction for IG bonds will be dictated by movement in US Treasury yields.

High Yield:
The HY market was similarly constructive as Chinese property bonds continued to be bid up though industrials were more mixed. India and Indonesian corps also saw net better buying. We still wait for more developments from Kaisa.

New Issues:
Stanchart issued USD2b of a Perp NC 5 Coco at 6.50%. Order books were in excess of USD21b! Currently trading at 101.50/101.60 (6.15%/6.12%). I think this continues to grind tighter to at least the 6% level (102 1/8 ), on the back of continuing top ups from PB clients who were massively under-allocated. That would bring it to close to flat (in yield terms) to the recent HSBC Perp NC10, but with a 5 year shorter call date.