ASIAN MORNING BUZZ: Primary quiet with attention on Korea

The APAC USD primary market was devoid of supply on Tuesday which marked a sixth session of zero issuance unless it was placed by a Chinese LGFV.

There was a mandate announcement to report though from Zhengzhou Urban Construction Investment Group Co., Ltd (BBB+ Stable by Fitch) which held investor calls yesterday ahead of a planned offering of senior unsecured notes.

The new deal pre-empts a couple of offshore maturities that the LGFV has coming up next year (US$200m 3.80% 16-Jan-2025 & US$350m 5.20% 30-Aug-2025).

In broader markets, US Treasury yields edged higher on Tuesday with the curve bear steepening slightly as the long-end underperformed. The 10 and 30-year yields rose by 3.48bp and 3.99bp to 4.225% and 4.402, while the 2-year yield was flat at 4.18%.

On the US data front, the Labor Department's Job Openings and Labor Turnover Survey (JOLTS) reported 7.744 million job openings in October, slightly above expectations. Layoffs decreased by 169,000, marking the largest drop since April 2023, suggesting employers are retaining workers despite economic uncertainties.

Meanwhile, Federal Reserve Governor Christopher Waller indicated a leaning towards maintaining current interest rates, emphasizing the need for more data before considering further cuts.

Closer to home, geopolitics are front page where political upheaval in South Korea prompted President Yoon Suk Yeol to declare martial law, citing threats from pro-North Korean entities, only for the president to reverse the decision after Parliament voted unanimously to block the move.

While that weighed on the South Korean currency it was largely shrugged off by US stock markets overnight that continued to benefit from demand for big tech.

That propelled the Nasdaq and S&P500 to new record highs with renewed gains of 0.40% and 0.05% although the Dow Jones bucked the trend with a 0.17% decline.

For a more comprehensive look at Tuesday’s price action and a look ahead to Wednesday’s key event risk see IGM’s Asia Breakfast Briefing.

Snapshot of APAC USD, EUR, CNH, CNY, HKD, SGD, AUD & NZD issues priced on 3rd Dec 2024. Click on the links for the most recent update:

US Credit

Yesterday it was “twelve issuers issuing.” Today it was “eight deals a pricing.” That’s right in a concerted effort to jam in as much issuance as possible before fixed income investors begin to close their books for the year, which normally occurs around the fifteenth of the month, eight borrowers raised $9.4bln in new supply. That brings the total number of deals for the week to 20, who have raised $17.45bln week-to-date (2 days). Three weeks ago 20 issuers also came to market in 48 hours though that time they raised $45bln. If you recall, the Street, at least according to our weekly issuance poll, was looking for, on average, $27bln to cross the tape this week, which is certainly a possibility. Especially with four potential issuers – Atlas Warehouse, FNB Corp, Tapestry Inc and Gruma SAB - having wrapped up investor calls either today or yesterday. For more colour see IGM's THE ENDGAME.

Europe Credit

Tuesday saw pockets of activity (totalling EUR1.78bn) across the various asset classes (barring SSAs), led by a surprise and ultimately very successful outing from French-domiciled corporate Veolia Environnement. The issuer brought a new EUR500m long 6yr at m/s+95, a level that appeared to be in line with fair value. Commerzbank's outing (EUR500m 4NC3 Snr Pref) was equally impressive from a demand perspective whilst the market continues to see a steady flow of HY names continuing to push their way into the limelight. For a more comprehensive look at Tuesday's primary session in Europe see IGM's EUROPEAN DAILY CLOSE.

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