Brekkie Bond Wrap

It was a relatively quiet end to the week as the global Bloomberg outage in the afternoon curtailed trading, and brought the week to an early close. HY bonds were about flat on the day with the focus still pretty much on idiosyncratic issues related to individual names.

There is still no news on Kaisa making good on the missed coupons. We are seeing the Kaisa complex open up defensively while clarity is sought. Big news that came out late Friday afternoon were China’s new rules to tighten financing for margin trading while the Shanghai and Shenzhen Stock Exchanges issued rules to make it easier for fund managers to lend shares for short sales. But on Sunday, the PBOC lowered RRR requirements (for the second time) by a rather aggressive 100 bps (to 18.5%). Chinese HY bonds are opening up a touch lower on these developments. Expect this week to see some volatility (read weakness) as macro risks like a potential Grexit loom over the horizon.

JACI IG +1.52bps to 193.2 (2015 range 183.9-214.7)
JACI IG Corp -1.5bps to 201.2 (2015 range 191-217.4)
JACI HY +2.7bps to 7.05% (2015 range 7%-7.89%)
JACI HY Corp +3.3bps to 7.21% (2015 range 7.33%-8.13%)
JACI Sovereign +1.12bps to 196.7 (2015 range 175.7-230.4)
CEMBI +2bps at 371.1 (2015 range 365.5-440.6)
EMBI Global +7.25bps to 395.8 (2015 range 381.6-454.8)
Itraxx Asia ex-Japan +2.5bps to 109 (2015 range 96.875-123)