Outlook for the week

We view high yield bonds as more favourable given historically cheap valuations and higher buffers against rising interest rates.

Key economic releases for the week

• Mon 5 Apr: SG: Retail Sales YoY (1:00PM), SG: Purchasing Managers Index (9:00PM), US: Markit US Composite PMI (9:45PM)
• Tue, 6 Apr: SG: Markit Singapore PMI (8:30AM), CH: Caixin China PMI Composite (9:45AM)
• Wed, 7 Apr: SG: GDP YoY (7th – 14th), SG: Foreign Reserves (5:00PM)
• Thu, 8 Apr: US: FOMC Meeting Minutes (2:00AM)
• Fri, 9 Apr: CH: CPI YoY (9:30AM)

Last Week Summary

Despite a short week due to the Good Friday holiday, demand in the Asia primary bond market is still evident with average Initial Price Guidance (IPG) Tightening increasing 10.1bps to 36.2bps and New Issue Premium (NIP) dipping 2.4bps to -5.4bps. 2 jumbo deals were priced last week, totaling USD 2.4bn (36% of total weekly issuance volume). There were a diverse variety of issuers across the first 3 days of last week, ranging from KNOC to the Republic of Maldives’ US$200mn 5yr sukuk at 10.5%. Resorts World Las Vegas’s new 10yr bonds proved to be the best performing new issue, trading 22bps tighter. US$6.595bn of bonds were issued from 12 deals last week. Breakdown: Investment Grade: US$5.45bn, High Yield: US$1.145bn.

• Asian conglomerate, Jardine Matheson made its debut in the offshore bond market with US$1.2bn of 10yr and 15yr Reg S bonds issued through its wholly owned subsidiary JMH Company. The deal tightened in aggressively from IPG levels on the back of strong investor demand. The deal was 4.4x covered on average across both tranches, with a stronger skew towards the 10yr tranche. The 10yr and 15yr bonds clocked in 42.5bps and 52.5bps of IPG Tightening respectively. Net proceeds of the notes will be used for corporate purposes and a planned USD 5.5bn acquisition of a minority stake in Jardine Strategic Holdings.
• 3 outstanding mandates were announced during the last two weeks.