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.

Key economic releases for the week

• Tue, 11 May: CH: CPI YoY (9:30AM)
• Wed, 12 May: Earnings: FRASERS PROPERTY – Bef Mkt, GOLDEN AGRI-RESOURCES – Aft Mkt, US: CPI YoY (8:30PM)

Last Week Summary

While the US economy begins to open up and states loosen restrictions, the situation is quite the opposite in Asia as Covid-19 infection rates pick up and countries beginning to tighten restrictions again. Despite this, Asia G3 primary market started off the month of May strong with deal volume at US$4.235bn (+19.6% WoW). Average Initial Price Guidance Tightening rose 6.2bps to 38.9bps. The 10yr US Treasury yield retreated to 1.57%. Last week, US$4.235bn of bonds was issued from 10 deals. Breakdown: Investment Grade: US$2.45bn, High Yield: US$785mn. Non-Rated: US$1bn.

• Singapore Press Holdings announced a plan to carve out its media business into a not-for-profit entity. Subject to shareholders’ approval, the media business will be transferred to a company limited by guarantee. SPH will make an upfront capitalisation of S$110mn to the new entity, in the form of a cash injection of S$80mn, and S$30mn worth of SPH shares and SPH Reit units. The bond desk saw buyers picking up SPH perpetual bonds following the announcement.
• ESR-REIT is looking to raise about S$150mn via a private placement and preferential offering to fund its S$119.2mn acquisition of a Tanjong Penjuru logistics facility, as well as asset enhancement initiatives for properties in Tai Seng and Ang Mo Kio. ESR-REIT has also obtained a S$68.5mn unsecured loan to finance the acquisition of a 10% interest in a GIC-majority-owned Australian logistics investment for A$60.5mn (S$62.4mn).
• 4 outstanding mandates remain from the last two weeks