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Bond Market Insights - Tues, 28 Nov 2023

US Treasuries posted solid gains on Monday, easily absorbing $109bn in 2yr and 5yr supply, having been under pressure in Asia time with yields pushing back above 4.5% before a strong bund market helped treasuries recover into some weaker data. New single-family home sales fell 5.6% in October with downward revisions to the prior month and Dallas Fed Manufacturing came in at -19.9 vs expectations of -16.0.

In China HY defaulted names pushed higher. The market started quoting the restructured Sunac bonds and rallied on news of the imminent inclusion in the index. Country Garden and Sino Ocean Land up on real money interest. Vanke saw some selling following Moody’s downgrade, Longfor and HK IG names were down on profit taking. The move is orderly with comments from Chinese authorities remaining supportive. Ex-China IG remained largely unchanged, demonstrating the limited amount of new issue paper being printed. Asia IG November Issuance stands at US$15.82bn so far, including Japan.

The new issue market has started to creak into action this morning. Avic International Leasing has announced a USD Senior Perp mandate. CITIC Bank is marketing a USD 10NC5 Tier 2 subordinated issue, initial price talk 5yr +200 (the current 5yr treasury being T 4 ⅞ 10/31/28).

Philippine’s announced an inaugural Sukuk issue. Mongolia is pricing up to USD350m new notes today, which was announced last week in connection with the tender (buyback). Initial price talk is around 8.75% for this 5.5yr issue. The issuer’s objective is to extend the average duration of its debt.


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