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, 3 May: Earnings: GREAT EASTERN HOLDINGS – Bef Mkt, SG: Purchasing Managers Index (9:00PM), US: Markit US Manufacturing PMI (9:45PM)
• Wed, 5 May: Earnings: AIMS APAC REIT – Bef Mkt, SG: Retail Sales YoY (1:00PM), US: Markit US Services PMI (9:45PM)
• Thu, 6 May: Earnings: FRASERS LOGISTICS & COMMERCIAL TRUST – Bef Mkt, SINGAPORE POST – Bef Mkt, UNITED OVERSEAS BANK – Bef Mkt, US: Initial Jobless Claims (8:30PM)
• Fri, 7 May: Earnings: OVERSEA-CHINESE BANKING CORP – Bef Mkt, SG: Foreign Reserves (5:00PM), US: Change in Nonfarm Payrolls (8:30PM)

Last Week Summary

In Asia credit space, China Huarong took a 3-notch Fitch downgrade to BBB last Monday. ICBC also supported the company by extending a loan for the repayment of S$600mn bonds that matured last Tuesday. This came after Chinese regulators called for banks to extend support to Huarong. In the primary market, despite deal volumes dropping drastically WoW (-80%), book coverage ratios was much higher at 6.4x compared to 4.5x. Average Initial Price Guidance Tightening also increased to 32.7bps compared to 28.6bps the week before. Issuance was skewed towards the 5yr tenor, with half of last week’s deals (6 out of 12) being priced on the 5yr. US$3.54bn of bonds was issued from 12 deals: Investment Grade: US$2.4bn, High Yield: US$882mn, Non-Rated: US$260mn.

• 4 outstanding mandates remain from last two weeks