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APAC CREDIT REVIEW: New milestones set in titanic primary week

Wow!, what an absolute blockbuster of a week we've had.......

Having struggled to maintain fluidity for any prolonged period of time for so long, the APAC US$ primary market exploded into life in the week ending 28-Jun-2024.

That as a raft of regional borrowers piled in amid monetary policy uncertainty and a subsequent reluctance to wait for rates to fall which may have been the preferred strategy earlier in the year, along with fears that credit spreads could widen further having bounced off historically tight levels in June.

The US$21.625bn raised by regional borrowers via 34 individual transactions this week boasts the highest volume week since the one ending 06-Jan-2023 when US$25.2bn made it over the line.

And while we re on the subject of records, this week's issuance volume propelled the monthly total up to US$37.284bn in June, the highest we've seen in any month since Jan 2023, which produced US$45.65bn of regional supply.

The curtain also comes down on Q2 and H1 2024 today of course, where unsurprisingly no historical records were broken, although this month's elevated total does make the numbers look significantly better in comparison.

That said, Q2 2024 produced US$78.078bn of APAC US$ supply, topping the US$49.142bn and US$69.308bn that priced in the same period in 2023 and 2022, although still fell well short of the US$117.208bn of supply that materialised in Q2 2021.

And issuance in H1 2024 came in at US$146.415bn, slightly ahead of the US$130.187bn that was placed in H1 2023, but below the US$170.753bn and US$274.991bn that hit the screens in the first half of 2022 and 2021 respectively, IGM data shows.

Mixed fortunes for issuers but broadly encouraging outcome overall

Whether this frenetic pace can continue into July remains to be seen, although one note of caution is that while investors have illustrated there is still ample cash available for the right name at the right price, they have also put up resistance to deals that haven't ticked those boxes.

That has been highlighted by notable price sensitivity in some order books which have fallen sharply at reoffer from their execution peak, as well as wide-ranging new issue concessions, mixed cover ratios at reoffer, and contrasting secondary market performance.

That is particularly true of those issuers that also targeted US investors through 144A/RegS and SEC-registered transactions, where the likes of Mizuho Financial Group Inc managed to raise US$1.5bn of 6NC5 and 11Nc10 paper at minimal NICs of ca. 1bp, while in contrast, fellow Japanese financial Nomura paid eye-catching premiums of ca. 17bp and 30bp on the 3- and 10-year fixed rate tranches of its US$2bn 3-part exercise.

That in a week where Japanese issuers made a dominant contribution to this week's issuance at US$11.25bn, or more than 52% of the overall total.

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