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
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.