Important Events
Last Friday, the Bank of Korea lifted the Base Rate by 25 basis points (“bps”) to 1.25%. The Bank of Korea said that the economy is growing in the face of higher coronavirus cases. Broadly speaking, private consumption has moderated but this was offset by higher export demand. Followings its forecast, GDP growth is expected to reach 3% this year on the back of healthy employment trends.
Meanwhile, inflation has risen to more than 3% due to sharp gains in the prices of petroleum, agricultural, livestock, industrial products and personal services. In order to ensure stable consumer price appreciation and maintain a sustainable pace of economic growth, the central bank had decided to increase the Base Rate in spite of Covid-19 uncertainties.
Asian High Yield Bond Index
Asian high yield bonds recorded losses as the Bloomberg Barclays USD Asian High Yield Index lost 3.2% during the week. The index has dropped close to 20% over the past year.
Agile Group Holdings announced on Monday that it had sold 14 non-core properties for a total sale value of RMB 2.8b. In connection with the transactions, the group is expected to receive approximately RMB 1.6b of cash proceeds, which will be used for general working capital purposes. On Thursday, Agile announced that it had repurchased USD 13m of the AGILE 6.700% 07Mar2022 Corp (USD).
Last Tuesday, Easy Tactic Limited informed that only USD 104m was set aside for the Tender Offer and Consent Solicitation for the GZRFPR 5.750% 13Jan2022 Corp (USD), lower than the USD 300m announced previously. Upon the completion of the tender offer on 13 January 2022, USD 608.631m of the bond remains outstanding.
Last Tuesday, Risesun Real Estate Development announced that the Exchange Offer and Consent Solicitation Memorandum for the group’s bond with a total principal amount of around USD 800m has concluded. The two new bonds will mature in 2023 and 2024 respectively.
On Tuesday, Shimao Group clarified that the group did not enter into a preliminary agreement in relation to the disposal of Shanghai Shimao International Plaza. Moreover, the borrower of the defaulted loans is not the subsidiary of the group, and their two subsidiaries have provided guarantees on the borrower's financial obligations.
On Wednesday, Sunac China proposed to issue 452m of placement shares, at a placement price of HKD10 per share, of which will raise gross proceeds of around HKD 4.52b.
Interest Rates and Currencies
The USDSGD currency pair ended Friday at 1.3477, down by 0.6% on a weekly basis. According to the Maritime and Port authority of Singapore, container volumes soared to 37.5m twenty-foot equivalent units in 2021, the highest level since 2011. The 2-year Swap Offer Rate (“SOR”) and the 10-year SOR declined by 1bps and 7bps to 1.0000% and 1.8225% respectively. Meanwhile, the 5-year SOR and 5-year SORA-OIS dropped by 5bps and 6bps to 1.6200% and 1.3850% respectively.
US Treasury yields registered strong gains last week, underpinned by strong inflation data and the growing chorus for interest rate hikes. US inflation climbed to a 39-year high of 7% in December. The 10-year US Treasury yield increased 2bps to 1.7841%, while the 2-year US Treasury yield jumped 10bps to 0.9668%. From a long term perspective, the 2-year US Treasury yield has been climbing at a very rapid pace over the last few months.
Corporate Updates and New Issues
Last Monday, ESR-REIT announced that it will divest 28 Senoko Drive, an industrial building in Singapore to Tat Seng Packaging Group for a sale consideration of SGD 12.0m, which is a 8.4% discount to the property’s fair value of SGD 13.1m. ESR-REIT acquired the building in 2007 for SGD 12.0m and the divestment will not have a material impact on the REIT’s net asset value. Proceeds from the sale will be used to repay existing borrowing obligations, asset enhancements and other corporate purposes. 28 Senoko Drive is a 4-storey office building with a remaining land lease tenure of 18 years.
Shriram Transport Finance Company Limited, a non-bank finance company, announced a new USD 3.5-year Social bond at an initial price guidance of 4.45% last week. With an issue date on 18 January 2022, the SHTFIN 4.150% 18Jul2025 Corp (USD) will pay a coupon of 4.15%. Investors may refer to the article, “Shriram Transport Finance to issue new USD 3.5Y Social bonds at 4.45% IPG” for more specific information on the issuer.
Singapore Airlines Limited proposed to issue 7-year USD notes at an initial price guidance of CT7+210bps on Wednesday. Upon book closure, the issuer raised USD 600m via the SIASP 3.375% 19Jan2029 Corp (USD), which will be issued at 99.273. For further details, kindly refer to “Singapore Airlines announces 7Y USD notes at CT7 + 210bps IPG”.
Guangzhou Development District Holding Group Limited, a state-owned financial services and investment platform in Guangzhou, China priced a 5-year Green bond at an initial price guidance of 3.30%. The GZGETH 2.850% 19Jan2027 Corp (USD) will be issued on 19 January 2022. For more details, please refer to our article - “Guangzhou Development Holding is launching new USD 5Y Green bonds at 3.30% IPG”.
Last week, Hong Kong Telecommunication Limited also launched a new bond - HKTGHD 3.000% 18Jan2032 Corp (USD). The bond had an initial price guidance of T+155bps. Investors may refer to the article, “Hong Kong Telecommunications Limited plans to issue 10Y USD notes at T+155bps IPG” for details.
CIMB Bank Berhad announced a 5.5-year note at an initial price guidance of T+100bps. The bank raised USD 500m through the CIMBMK 2.125% 20Jul2027 Corp (USD), which were priced under the group’s sustainable development goals bonds and sukuk framework. Investors may read the article “CIMB Bank is proposing to issue new USD 5.5Y SDG bonds at T+100bps IPG” for more information.
