Weekly Market Review - Investfunds
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Weekly Market Review
June 7th 2021
Highlights:
• The most significant change to the US Treasury Yield Curve occurred in 20Y tenor with a respective
value of -2bps.
• The weakest EM country currency relative to the US dollar is TRY, with -1.16% performance.
• The strongest EM country currency relative to the US dollar is BRL, with 3.46% performance.
• The country with the highest default probability based on 5Y CDS is Argentina, with a respective
value of 70.9%.
• The most considerable year-to-date change in default probability based on 5Y CDS is 18p.p. in
Argentina.
News:
• China Huarong –China Huarong AMC may sell its non-core assets due to debt problems. Regulators
are forcing CHAMC to offload controlling stakes in Huarong Xiangjiang Bank, Huarong Rongde
Asset Management, and Huarong Consumer Finance. In early April, investors panicked on worries of
debt restructuring, leading to a sharp spike in offshore bonds from China Huarong AMC and its
subsidiaries. These bonds have yet to recover from the shocks. The China Huarong International
Holdings 2.125% Sep2023 bond is currently quoted at 18.09% levels. China Huarong AMC share
trading has been halted since the end of March following the delayed announcement of annual results
for 2020. It was priced at HKD 1.02 as of 31st March 2021.
• Serba Dinamik – Fitch downgraded Serba Dinamik Holding Berhad to B- with a negative outlook
from BB- on concerns regarding refinancing risk and liquidity. Last week the company indicated
concerns to external auditors KPMG about the subject of its statutory audit for some sales
transactions and IT contracts. SDHB provides engineering services and solutions in operations and
maintenance for the oil and gas industry. 6.3% May 2022 bond price sharply plunged from USD 100
to USD 40 levels.
• Garuda –Indonesia’s flagship carrier is likely to suspend debt payment to avert bankruptcy. As per
the government statement, the company has an unsustainable debt of USD 4.5 billion and a USD 300
million loss per quarter. Due to the Covid-19 impact and travel restrictions, Garuda’s financial
position deteriorated. A post debt suspension announcement saw the price of 5.95% June 2023 go
down to USD 42.5 levels.
• TML Holdings – The Indian car manufacturer TATA Motors’ B-rated wholly-owned subsidiary
raised USD 425 million by issuing a 5-year maturity bond at 4.35% at 351 bps over UST. The bond
has a call option after 2.5 years. The proceeds from the bonds will be used for corporate purposes and
refinancing of loans. TML holdings has strong parentage support from Tata motors which is part of
the strong Tata group.
© Cbonds.com | Weekly Market ReportLargest High Yield Issues
Amount, Issuer Rating End of
Issue Country
mln USD M/S/F Placement
Zhenro Properties Group, 7.1%
China 340 B1/–/B+ 01.06.2021
10sep2024, USD
China Hongqiao Group, 6.25%
China 500 Ba3/BB-/BB 01.06.2021
8jun2024, USD
Senegal, 5.375% 8jun2037, EUR Senegal 943 Ba3/B+/– 02.06.2021
Petro Rio, 6.125% 9jun2026,
Brazil 600 B1/B+/– 02.06.2021
USD
Precision Drilling, 6.875%
Canada 400 B2/B/B+ 02.06.2021
15jan2029, USD
Petrobras, 5.5% 10jun2051, USD Brazil 1500 Ba2/BB-/BB- 02.06.2021
Agile Group Holdings, 5.5%
China 450 Ba3/BB/– 31.05.2021
17may2026, USD
Datang Group Holdings, 12.5%
Hong Kong 300 B2/B/– 31.05.2021
6jun2022, USD
*High yield placements included with an outstanding amount of more than $200 million, taking place between 31.05.2021 and
04.06.2021
Sovereign Rating Changes on May 31- June 7
New Old
Country Date
Rating Outlook Rating Outlook
Australia AAA Stable AAA Negative 07-06-2021
Uzbekistan BB- Stable BB- Negative 04-06-2021
© Cbonds.com | Weekly Market ReportCbonds Country Sovereign Eurobonds Indices
Eurobond sovereign indices measure T-spread, total yield and other indicators for the major issuing
countries. They are calculated once every trading day (at close).
© Cbonds.com | Weekly Market ReportMarket Indices & US Treasury Yield Curve
UST 2Y UST 10Y DOW NASDAQ
S&P500 SOFR
YTM YTM JONES COMPOSITE
Last value 0.14 1.56 34756.39 4229.89 13814.49 0.01
Change 0.00% -1.27% 0.66% 0.61% 0.48% 0.00%
*The change for all indices except SOFR is calculated as a difference between values at 28.05.2021 and 04.06.2021. For SOFR
change calculated as a difference between values at 28.05.2021 and 03.06.2021.
US non-farm payrolls for May posted strong growth of 559k jobs, but these were lower than economists’
expectations, which were well above 650k. US stocks gained as the unemployment rate declined to 5.8%
against 6.1% in the previous month. The Dow Jones and S&P 500 indexes rose by 0.66% and 0.61% WoW,
respectively.
The US treasury long end of yield curve dipped 3-6 bps, as the bond markets expect a slower recovery to full
strength on the US jobs markets. The US Fed indicated that it would gradually offload USD 13.7 billion US
of corporate bonds and an ETF portfolio created during the pandemic in March-20.
© Cbonds.com | Weekly Market ReportCurrency Rate Indices
Currency rate indices track US dollar dynamics relative to foreign currencies. They are calculated once every
trading day (at close).
© Cbonds.com | Weekly Market ReportICE and Interactive Default Probability Indices
Default probability indices assess the risks on the Sovereign debt market for the respective country. They are
calculated based on CDS for terms of between 3 months and 30 years and calculated once every trading day
(at close).
© Cbonds.com | Weekly Market ReportWeekly Knowledge Hub:
Masala bonds
Masala bonds are bonds denominated in Indian Rupees (INR) and issued outside India. As these bonds are
issued outside India, they are traded in foreign currency, usually in US dollars. Indian corporations usually
issue Masala bonds to raise funds from the foreign investors.In 2007, Masala bonds were first listed on the
London Stock Exchange with Barclays Bank as their issuer. In 2013, the Masala bonds of IFC (IFC, 7.75%
3dec2016, INR) were listed on the Singapore Stock Exchange. In late September 2017, the Indian Renewable
Energy Development Agency (IREDA) placed 5Y "green" Masala bonds on the London Stock Exchange
(Indian Renewable Energy Development Agency, 7.125% 10oct2022, INR). A unique feature of Masala
bonds is that the currency risk in INR is borne by investors rather than bond issuers, as it would be if an
Indian corporation issued securities in foreign currency. It means that the yield of the investor in Masala
bonds will change against the declared yield if the rate of Indian Rupee (INR) rises or falls against the
payment currency, e.g., US dollar during the bond maturity period. Masala bonds are attractive to issuers
because they allow them to set a coupon rate lower than domestic bonds in India, as well as help meet the
demand of foreign investors without assuming the currency risk. Masala bonds are generally purchased by
non-resident Indians and foreign investors. With higher inflation in India compared to other countries,
interest rates in INR are currently higher than those in major foreign currencies such as USD, EUR, and JPY.
It makes the yield of the Masala bonds more attractive for foreign investors compared to bonds denominated
in USD / EUR / JPY. These securities are also attractive for investors, as they do not have access to the
national market and get an opportunity to acquire INR-denominated assets through the reliable infrastructure
of Euroclear and Clearstream international depositories. Many investors prefer bonds with shorter maturities
to limit the risks associated with, for example, the economic climate in the country or changes in exchange
rates that may occur over a longer time period. This is one of the reasons why most Masala bonds have a
maturity of 3 to 5 years.
Read more about bond types in the Cbonds glossary
Contact details:
Dmitrii Larionov, Specialist of the International Debt Markets Department,
d.larionov@cbonds.info
Paresh Nemade, India Representative,
tel: + 91 9221297616, pareshnemade@cbonds.info
Cbonds subscription:
pro@cbonds.info
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