We view high yield bonds as more favourable given below historical average valuations (Figure 3) providing higher buffer against rising interest rates.
Key economic releases for the week
Mon, 7 Jun: SG: Foreign Reserves (5:00PM)
Wed, 9 Jun: SG: Bloomberg June Singapore Economic Survey (11:00AM)
Thu, 10 Jun: US: CPI Core Index (8:30PM)
Fri, 11 Jun: US: U. of Mich. 5-10 Yr Inflation (10:00PM)
Last Week Summary
Asia primary debt market activity remained high with 3 jumbo deals priced. Average number of accounts participating in deals last week increased to 155.4 accounts, up from 112.4 accounts the previous week. Indonesian issuers were actively coming back to the offshore market, issuing US$4.75bn last week – 33% of Indonesia’s YTD issuance volume. US$16.075bn of bonds was issued from 21 deals. Breakdown: Investment Grade: US$7.6bn High Yield: US$1.615bn, Non-Rated: US$6.86bn.
The Republic of Indonesia sovereign priced a US$3bn triple tranche sukuk bond deal, which included a 30yr Green Sukuk tranche. The 5yr, 10yr, and 30yr bonds were priced at 1.5%, 2.55%, and 3.55%, after tightening 40bps, 45bps, and 45bps respectively from the initial price guidance. The deal saw an average book coverage of 3.6x and the 10yr tranche garnered the strongest interest with the largest final orderbook (US$4.8bn or 46.6% of the final orderbook). Banks took the lion share of the 5yr tranche (41%) while fund managers took the majority of allocations for the 30yr tranche (63%).
Troubled oil and gas group KrisEnergy announced late on Friday that it has submitted a winding-up petition to the Grand Court of the Cayman Islands. The firm said that based on actual and contingent liabilities, it is unable to pay its debts and will proceed with liquidation. The decision comes as the company’s liabilities have exceeded the value of assets. There is also a lack of acceptable alternative restructuring options and little possibility of near-term infusion of fresh funds.
1 outstanding mandates remain from last two weeks.
