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.