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ASIAN MORNING BUZZ: Quiet last week of May in primary as UST yields jump

The APAC US$ primary bond market is winding down the month of May on a subdued footing, with Wednesday s activity limited to just one sub-benchmark US$142m 6.45% 04-Jun-2025 line from unrated Chinese LGFV Fujian Jinjiang Construction Investment Holding Group Co., Ltd.

That nudged weekly issuance volume up to US$904m, while the monthly total in May currently stands at US$19.3727bn or US$14.8727 for those who prefer not to include Japanese issuers in their APAC totals.

That leaves just two sessions to top up those totals, and while the pipeline of confirmed issuers is looking moderately healthy, with the likes of PT Krakatau POSCO, Continuum Green Energy, Nine Dragons Paper and Wuhan Urban Construction Group Co., Ltd all waiting in the wings, that latter trio only kicked-off their investor meetings yesterday with Continuum Green Energy not due to wrap up its marketing efforts until 5th June.

Recent indicators illustrate that the funding landscape remains accommodating for regional investment grade borrowers though, as reflected by ongoing comfortably oversubscribed order books by varying degrees and minimal or negative new issue concessions.

However, while issuers can also take heart from tight credit spreads (investment grade spreads hit a new historically closing tight of 75.5bp yesterday as highlighted by the Bloomberg Asia USD IG Bond Index Avg OAS in the Composite Snapshot below), what has been less conducive for potential issuance volumes has been a renewed move higher for US Treasury yields of late, amid some weak bond auctions, conflicting US economic data and hawkish Fed rhetoric.

External influences underpinn fresh rise for US Treasury yields

And that trend largely continued yesterday led by the long-end of the UST curve where the 10- and 30-year yields jumped by a fresh 6.17bp and 6.70bp to 4.612% and 4.733% and are now up by 18.99bp and 19.51bp versus where they were a week ago. The front-end managed to buck the wider trend as the 2-year yield dipped 0.38bp to 4.973% on Wednesday but still ended 10.36bp higher than this time last week.

That was in part fuelled by spillover from international markets after inflation topped forecasts in Germany and Australia, the former propelling Bund yields to fresh YTD highs, while trimming the outlook for ECB rate reductions to just 58 basis points this year from 75bp two weeks ago and 94bp at the beginning of Q2.

Meanwhile, JGB yields gapped to their highest since 2011 yesterday amid continued weakness in the yen as traders conclude that the BOJ may be forced to hike rates earlier than expected in defence of the currency.

And the final nail in the coffin for US government bond markets came from a sloppy US 7-year note auction, the third such result this week and indicative of waning demand as global bond vol picks up.

And the latest spike in yields also weighed on risk sentiment as highlighted by a sharp decline for the three major US stock indices overnight. That was spearheaded by a 1.06% fall for the Dow Jones while the S&P500 and Nasdaq dropped by 0.74% and 0.58%.

For a more comprehensive look at Wednesday s price action and a look ahead to Thursday s key event risk across the globe see the Asia Breakfast Briefing.

Snapshot of APAC USD, EUR, CNH, CNY, HKD, SGD, AUD & NZD issues priced on 29th May 2024. Click on the links for the most recent updates:

Rating (M/S/F)
Latest Book Update

Jinjiang Road and Bridge Construction & Development Co., Ltd. (Guarantor: Fujian Jinjiang Construction Investment Holding Group Co., Ltd)
RegS only
Senior Unsecured
USD142m 6.45% 04-Jun-2025
6.80% area
6.45% (#)
6.45% / 100


Maybank Singapore Ltd
RegS only
Covered Bond backed by Singaporean residential mortgage loans
EUR500m 3.439% 07-Jun-2027
MS+26 (+/- 1bp) WPIR
MS+25 / 100

Airport Authority (a statutory body corporate established in Hong Kong under the Airport Authority Ordinance and wholly owned by the Government of Hong Kong)
RegS only
Senior Unsecured
CNY1.5bn 2.93% 05-Jun-2034
3.40% area
2.93% (#)
2.93% / 100
Ruichang State-owned Investment Holding Group Co., Ltd (Guarantor: Jiangxi Province Credit Financing Guarantee Group Co., Ltd)
RegS only
Senior Unsecured
CNY600m 3-year
5.90% (#)

US Credit

For the second straight session, high grade borrowers chose to ignore another dismal day in the broader markets to bring five new deals to market. Those five managed to raise US$6.95bln, nearly matching yesterday s US$7.05bln from the same number of borrowers. That brought ex-SSA issuance for the week to an even US$14bln, enough to top the lowest weekly estimate of US$10bln, and just shy of the average estimate of US$15bln. Not bad for a four-day week, it was also enough to bring ex-SSA issuance for the month to US$130.35bln, eclipsing the average monthly estimate of US$125bln, but still shy of the decade-long average May issuance of US$144bln. For more colour on Wednesday s primary session in the US see IGM s THE ENDGAME.

European Credit

The public IG pipeline all but emptied on Wednesday as issuers across all sectors made funding plays ahead of the Corpus Christi holiday in parts of Europe on Thursday. Single currency volume on the day finished up at EUR24.95bn, although that was given a big boost by the Kingdom of Spain's latest syndicated 10yr line that was sized at EUR10bn on a bumper EUR125bn book. Also boosting the overall number was US corporate Medtronic which took EUR3bn out the market via a four-part that was the sixth largest single currency IG corporate deal of 2024. For more colour see the EUROPEAN DAILY CLOSE.

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