SG Bonds Weekly Week 17 April 26, 2021 162

Outlook for the week

We view high yield bonds as more favourable given historically cheap valuations (Figure 2) and higher buffers against rising interest rates. These include the KOHSP 5.1% 27Oct2022, ESRCAY 5.65% Perpetual, and EREIT 4.6% Perpetual.

Key economic releases for the week

  • Mon, 26 Apr: SG: Industrial Production YoY (1:00PM)
  • Tue, 27 Apr: Earnings: LIPPO MALLS INDO RETAIL TRUST – Aft Mkt, MAPLETREE COMMERICAL TRUST – Aft Mkt
  • Wed, 28 Apr: SG: Unemployment rate SA
  • Thu, 29 Apr: Earnings: MAPLETREE INDUSTRIAL TRUST – Aft Mkt, US: FOMC Rate Decision (2:00AM), US: Core PCE QoQ (8:30PM), US: GDP Annualized QoQ (8:30PM)
  • Fri, 30 Apr: Earnings: DBS GROUP HOLDINGS – Bef Mkt, FRASERS HOSPITALITY TRUST – Bef Mkt, SG: Bank Loans and Advances YoY (10:00AM), SG: Money Supply M2 YoY (10:00AM), CH: Manufacturing PMI (9:00AM)

 

Last Week Summary

The 10yr US Treasury yields fell to settle at 1.56% after Biden proposed higher taxes on the wealthy. Activity in the Asia G3 credit space continued to pick up, with investment grade issuers active. Total issuance volume was up US$4.46bn (+34.5%) and Average Initial Price Guidance (IPG) Tightening increased 2.6bps WoW. Average Order Book coverage also rose to 4.8x. US$17.36bn of bonds was issued from 21 deals. Breakdown: Investment Grade: US$16.03bn, High Yield: US$937mn, Non-Rated: US$393mn.

  • The world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co (TSMC) tapped the offshore market for a US$3.5bn triple tranche USD offering through its wholly owned subsidiary TSMC Global. The deal tightened 30bps from IPG across the 5-year, 7-year and 10-year tranche to price at Treasuries plus 50bps, 55bps and 70bps, respectively. Proceeds will be mainly for the expansion of its production capacity to meet increased demand for high-tech semiconductors, with plans to spend up to US$30bn on its capital expenditure in 2021.

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About the author

Profile photo of Timothy Ang

Timothy Ang
Research Analyst
Phillip Securities Research

Timothy covers credit analysis of local and foreign bonds. Previously an equity dealer, he handled equity trade execution and portfolio management. 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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