SG Bonds Weekly – Fed remains dovish despite inflation July 19, 2021 239

Outlook for the week

New bond issues may begin tapping the SGD market after a lull in June.

Key economic releases for the week

  • Mon, 19 Jul: SG earnings: MAPLETREE LOGISTICS TRUST – Aft Mkt
  • Thu, 22 Jul: SG earnings: ARA LOGOS LOGISTICS TRUST – Bef Mkt, SUNTEC REIT – Bef Mkt, SATS – Aft Mkt;
  • Fri, 23 Jul: SG earnings: ESR – REIT – Bef Mkt; SG: URA Private Home Prices QoQ (8:30AM); SG: CPI Core YoY (1:00PM); US: Markit US Manufacturing PMI (9:45PM)

Last Week Summary

Jerome Powell affirms the Federal Reserve will provide stimulus to aid economic recovery

despite the highest inflation rate in a decade. As a result, the 10y US Treasury yields rallied from a mid week high of 1.42% to print below 1.3% on Thursday. In Asia, The People’s Bank of China (PBOC) surprised the market with a reduction in reserve requirement for its banks. Activity in Asia primary market picked up this week with 21 bonds priced over 19 deals. 13 out of the 19 deals are from Chinese issuers, with 7 of them from the Chinese real estate sector. It is a great week for investors in the primary market, with issuers leaving decent new issue premium on the table and strong secondary market performance as a result of the rates rally. US$7.699bn of bonds was issued from 19 deals. Breakdown: Investment Grade: US$5.450bn, High Yield: US$989mn, Non-Rated: US$1.26bn.

  • Property developer, Sunac China issued a new dual-tranche bond before the People’s Bank of China announced a cut in the reserve requirement ratio. The high-yield issuer priced a new 3.25NC2.25 bond at 7% and reopened its’ 6.5% notes due in Jan 2026 for a tap of US$100mn which was priced at 7.3%. Both the new issue and the tap deal tightened only 20bps from the initial price guidance. Another property developer, Agile Group issued a 3.75NC2.75 senior secured bond at 5.6% this week, with share pledges of the Subsidiary Guarantors as security. Both Sunac China and Agile Group bonds offered decent new issue premium to access the market (Sunac: 18.52bps; Agile: 21.29bps).
  • 3 outstanding mandates remain from last two weeks.


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About the author

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Timothy Ang
Research Analyst
Phillip Securities Research

Timothy covers the US technology sector focusing on hardware companies. Previously a credit analyst, he handled bond analysis and research for the fixed income desk. He has presented seminars for organisations such as SIAS, SPH and IRAS, commentated live market updates for 93.8FM, and authored investment articles for the Business Times newspaper. He graduated with a Bachelor of Commerce in Accounting & Finance from the University of Western Australia.

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