ASIAN MORNING BUZZ: Issuers brave volatile backdrop amid trade war fears

Headlines

** APAC issuers brave volatile backdrop to print on Tuesday

** Issuance volumes in the past two days suggests we are on track to claim the second highest volume week of 2025

** Diversity on Tuesday's menu with Senior, Subordinated and HY transactions on offer

** US stocks experience wild swings amid ongoing tariff jitters

** UST yields reverse recent decline as the curve bear steepens

A barrage of five regional issuers dived into the USD primary market on Tuesday with a combined print of US$3.7bn, amid broader risk-off sentiment stemming from the ongoing trade war.

That brought total week-to-date supply to US$7.3bn, officially the highest volume week since the first two weeks of the year, which churned out $29.7bn and $7.45bn respectively. And with three days still left this week, we are on course to close out as the second highest volume week of 2025.

Yesterday's scene was dominated by a mix of Chinese, Indian and Japanese investment grade and high yield issuers, which offered different structures.

Spearheading the session in terms of deal size was Meiji Yasuda Life Insurance Company's US$2.1bn 6.1% 30.25NC10.25 Subordinated bonds. The well-received capital notes, which triggered ca. US$6.4bn of orders at reoffer, allowed the price to be slashed by 40bp during execution, landing at a reoffer yield of 6.1%. The deal marked the second consecutive year of funding in the denomination for the issuer, having previously printed a US$1.75bn 30NC10 Subordinated line back in September last year.

The other Subordinated transaction on the menu yesterday was offered by Hysan Development Company Limited as part of a broader liability management exercise. The US$750m PerpNC 5.5-year offering also seemed to have garnered decent interest from yield hunters, as seen by its orderbook of >$3.3bn (incl $60m JLM int + $55.14m addl prop as per SFC code) at FPG. The transaction eventually tightened 40bps from IPGs of 7.6% to a reoffer yield of 7.2%.

In the HY space, Indian financial services provider IIFL Finance Limited tapped its existing US$325m 8.75% Senior Secured Fixed Rate Note (maturing 24 July 2028) for another US$100m at a reopening yield of 8.35%, bringing the total outstanding to US$425m. The line was bid at YTM of 8.22% on Tuesday morning, indicating that buyers of the tap were offered an additional 13bp of premium in yield terms. That appeared to support a decent appetite for the deal, as indicated by an orderbook of >US$430m (incl $40m JBR int + $0.4m addl prop as per SFC code) at FPG, indicating a cover ratio of 4.3x. while we await confirmation of the final book size at reoffer.

Last but not least, yesterday's deals also included 3-year Senior Unsecured trades from Hong Kong headquartered securities company Shenwan Hongyuan Securities and Chinese LGFV Knowledge City (Guangzhou) Investment Group, which in turn boosted the daily supply by an additional $750m.

US stocks whipsaw as market follows tariff news closely

It was another volatile session for US stock markets as sentiment shifted quickly amid the uncertainty around tariffs and their potential impact.

Equities were hammered at the open as President Trump stayed true to his words, imposing 25% tariffs on Canadian and Mexican imports and doubled an existing charge on China. That sparked a quick retaliation with Canada hitting back with levies on $107bn worth of US goods while China announced tariffs on a slew of US farm products earlier in the Asian session on Tuesday.

Stocks then rallied later in the session after US Commerce Secretary Howard Lutnick suggested there could be room for some tariff relief on Mexican and Canadian goods.

That said, it was still a sea of red across the three US benchmark indices at the close, with the Dow getting hit the worst at -1.55%, followed by the S&P500 at -1.22% and Nasdaq at -0.35%.

With that overnight move, the Dow has officially joined its peers to mark a negative year-to-date return of -0.05%, while the Nasdaq continues to underperform in 2025 at -5.31% as the AI-driven rally continues to fizzle out.

US Treasury curve bear-steepens as trade war continues to deepen

It appeared that the uneasiness surrounding the global economic outlook amid the tariff tug-of-war finally caught up with the US Treasury market, where yields reversed course after declining for the previous two sessions.

The Treasury curve bear-steepened on Tuesday with moves most dramatic at the long-end where the 10-year and 30-year yields rose by 8.91bp and 8.83bp to close at 4.244% and 4.538% respectively. A rise of the 2-year yield was less pronounced at +4.09bp, which led to a closing level just shy of 4%.

Meanwhile, the US$70bln 6-week bill auction drew 4.240% with 77.63% allotted at the high and a bid/cover ratio of 2.92

Looking ahead to Wednesday's headline US event risk, where markets will be focused on the US ISM Services data after the manufacturing data hinted at a rising risk of stagflation. February ISM Services data is forecast for a 52.5 reading compared to 52.8 prior, while ISM Services Prices Paid is expected at 60.0 compared to 60.4 previously.

With Services comprising a significantly larger portion of the US economy, any underperformance here could continue to see market reprice the odds for an earlier Fed rate cut scenario.

We will also get an early precursor on labour market conditions where ADP Employment Change is forecast at 140k compared to 183k prior, as a warm up for the more widely anticipated NFP release on Friday, which covers both private and public sector employment.

For a more comprehensive look at Tuesday's price action and a look ahead at Wednesday's key event risk, 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 4th Mar 2025. Click on the links for the most recent update:

US Credit

Four borrowers raised a modest $4.2bln today, bringing ex-SSA issuance for the week to $32.4bln. Keep in mind, the Street figured, on average, that ex-SSA issuers would raise $60bln this week, thought no one really counted on the chaos in the broader markets. However, they did count on an M&A-related transaction, or two, to boost this week’s volume. And coincidently, should the whispered Mars deal develop as expected, that would bring this week’s issuance within spitting distance of that mark. For more colour, see IGM's THE ENDGAME.

European Credit

Equities were under heavy pressure on Tuesday amid the escalation of global trade wars, but that failed to stop the European primary bond market from churning out deals. In the single currency, seven names (mostly following up mandates announced the previous session) raised a combined EUR13.7bn and saw solid demand on the whole despite the broader risk-off tone. Tuesday’s total was spearheaded by SSA giants Belgium (EUR5bn) and EIB (EUR4bn), with Germany set to become the next to go big on Wednesday having mandated leads for a long-dated syndicated line on the day. See the EUROPEAN DAILY CLOSE for more details.

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