Outlook for the week

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

• Wed, 30 Jun: SG: Bank Loans and Advances YoY (10:00AM), SG: Money Supply M2 YoY (10:00AM), CH: Manufacturing PMI (9:00AM),
• Thu, 1 Jul: SG: URA Private Home Prices QoQ (8:30AM)
• Fri, 2 Jul: SG: Purchasing Managers Index (9:00PM), US: Change in Nonfarm Payrolls (8:30PM)

Last Week Summary

Activity in the Asian primary market picked up last week even as we approach the end of 1H21 after Fed Chair Jerome Powell reassured markets last week. The 10 year US treasury yield inched down week on week. Number of new bond issues doubled to 19 and average order book coverage jumped to 6.7x last week (up from 4.1x previous week). Asian issuers also showed increased preference to issue in EUR, with 3 deals priced last week, totaling EUR2.3bn. US$9.4bn of bonds was issued from 19 deals; breakdown: Investment Grade: US$6.97bn, High Yield: US$1.69bn, Non-Rated: US$813mn

• The Hong Kong and Shanghai dual-listed company, Shenzhen Expressway priced a US$300mn 5 year senior unsecured bond. The investment grade rated toll-road operator saw strong investor demand as final orderbooks were 22.1x covered, allowing the deal to tighten 55bps from initial price guidance level. The deal was one of the most popular deals this year, clocking in a large initial price guidance tightening, book coverage (second highest for the year) and number of accounts participation. The bond continue to trade tighter on the break, tightening around 7bps from issue spread.
• RHB Bank priced a US$500mn 5 year deal at T+78bps. The Malaysian bank last priced a USD 5 year bond in February 2019 at T+128bps. This brings total YTD issuance from Malaysian issuers up to US$8.3bn (10 deals), well above FY20 total of US$7.5bn (2deals).
• 4 outstanding mandates remain from last two weeks.