ASIAN MORNING BUZZ: Broader market calm supports primary market prospects?

Headlines (15-Apr-2025)

** APAC USD primary market poised to re-open as calmer risk market tone persists?

** Pipeline healthy but will regional issuers have the same level of enthusiasm after funding costs rise?

** US Treasury yields pull back from recent highs and stocks rise for second day amid a barrage of mixed news

The APAC USD primary market was devoid of supply once again on Monday. That kept monthly issuance volume at just US$6.306bn as we hit the half way point of April.

However, with a second day of gains on Wall Street overnight indicating that the risk bulls will also retain the upper hand in Asia this session, we may not have to wait too much longer to see our first benchmark issue away from Japan or China since Bank of the Philippine Islands graced the screens on 27^th March.

That is assuming issuers have maintained the same level of enthusiasm as they had before President Trump’s sweeping tariff announcement earlier this month, and everything that has happened on the subject since then, which sent US Treasury yields through the roof and widened secondary credit spreads sharply.

And that’s not to mention any additional inflated new issue concessions which may be demanded by cautious investors so soon after that level of wider market turmoil.

The pipeline of confirmed Asian USD issuers remains robust however, with the likes of Tongyang Life Insurance, KT&G Corporation, Korea Water Resources Corporation, Hana Securities Co., Ltd, POSCO Holdings Limited, Sammaan Capital Limited and Tata Capital Limited, among those in the frame when a suitable window of opportunity eventually becomes available.

One key obstacle that kept regional issuers away from the USD market in past couple of years though has been the high costs of funding in the denomination compared to alternative local currency bond and/or loan options, and we would hope that recent price action hasn’t created that situation for some potential borrowers again.

US Treasury yields fall sharply as traders absorb a slew of mixed news

On a more positive note, cooler heads also prevailed in the US Treasury market yesterday where yields pulled back notably from their recent highs as traders soaked up a barrage of news.

That was led by the belly of the curve where 5- and 10-year yields declined by 14.78bps and 11.56bps to 4.012% and 4.374%, while the 2-year yield dipped by 11.49bps to 3.845%.

Meanwhile, all three major US stock indices closed in positive territory by +0.64% (Nasdaq), +0.79% (S&P500) and +0.78% (Dow Jones).

That was in part attributed to President Trump’s temporary tariff exemption of smart phones, computers and semiconductors.

And speaking in the White House on Monday, Trump also said he was looking into possible tariff exemptions on autos and parts “to help some of the car companies”.

Meanwhile, also aiding risk sentiment overnight were comments from Taiwanese President Lai Ching who suggested that the first round of tariff related talks with the White House have gone well.

However, questions clearly remain, as White House Economic Advisor Kevin Hassett backed Commerce Secretary Lutnick’s view that the current tariff pause on semiconductors and electronics is temporary. Hassett emphasized that duties tied to national security remain “on the table.”

On the data front, NY Fed inflation expectations rose by 3.58% with respondents expecting higher prices and dwindling job prospects on the back of Trump's trade revamp.

And in prepared remarks, Fed Governor Waller acknowledged that tariff-driven inflation could push the Fed closer to cuts if recession risks rise. That said, he characterized the inflationary impulse as “likely temporary,” contingent on the scale and duration of the trade conflict.

And on the geopolitical front, Iran reiterated that complete U.S. sanctions relief is a baseline requirement ahead of renewed nuclear talks, with Rome emerging as the likely venue for round two.

For a more comprehensive look at price action on Monday and a look ahead to what events global markets will be keeping a close eye on Tuesday, see IGM’s Asia Breakfast Briefing.

Source: IHS Markit iTraxx & Bloomberg

Snapshot of APAC USD, EUR, CNH, CNY, HKD, SGD, AUD & NZD issues priced on 14th Apr 2025. Click on the links for the most recent update:

US Credit

Halfway through the month of April, a month that was expected to yield, on average, $105bln in fresh ex-SSA high-grade supply, issuance stands at $33.55bln, thanks to a couple of widely expected sizeable deals for two of the “big six” banks. Morgan Stanley, after reporting better-than-expected earnings of Friday, raised $8bln through a 4-pt offering – there was a floater tranche dropped at guidance – of fixed-to-floating rate and floating rate notes. It was the bank’s second trip to the US public debt market this year having raised a like amount back in January. For more colour, see IGM's THE ENDGAME.

European Credit

Issuance windows have been hard to come by in recent weeks amid the escalating trade wars, but one presented itself on Monday with European stocks firmly in the green. Making the most of the window we had a trio of names with SSA borrower NIB joined by a couple of corporate names in the form of Gasunie and General Mills. The trio raised EUR2.5bn and kicked off a week which participants in our issuance poll expected to yield an average EUR13.5bn of (ex-HY) paper. The deals went well, and should the better tone hold on Tuesday then we would expect others to go live and launch a trade ahead of the looming ECB verdict which is followed by Easter holidays. See the EUROPEAN DAILY CLOSE for more details.

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