Evergrande Shares up as Interest Payment Comes Due

Chinese real-estate developer Evergrande is due to make an interest payment of $83.5m on an overseas bond. The firm has debts of over $300bn.

Pinault's Kering in 1.2 billion (dual tranche) euro bond issue as Q1 Revenues Fall 15%

French conglomerate Kering, which owns the brands Gucci, Balenciaga, Bottega Veneta, Alexander McQueen and Saint Laurent, reported that group revenue fell 15.4% in Q1 2020 as a result of the coronavirus pandemic.

Kering exited the retail industry and focused on luxury goods under Pinault's leadership. Kering evolved out of PPR (Pinault-Printemps-Redoute). Pinault is a graduate of France's HEC.

It is issuing a dual tranche bond, each tranche amounting to 600m euros, the first maturing in three years (0.25% coupon), the next in eight years (0.75% coupon). The proceeds will, in part, be used to extend the average maturity of their debt.  The conglo's long term debt is A-rated.

Chairman and Chief Executive, Francois-Henri Pinault, stressed renewed focus on business continuity, adapting cost base and preserving cash position as top priorities. He also expressed his belief in his brands' abilities to "blend long-term vision with near-term imperatives".

Key financial metrics for Kering include Revenues (15.9 billion euro in 2019), EBITDA (6bn euros), EBITDA margin, as % of revenue (37.9% 2019, 37.3% 2018), recurring operating margin (30% 2019).

The Carry Trade Concretised - Uridashi Bonds

Uridashi bonds are bonds sold to Japanese household investors, giving returns in a high-yielding currency such as NZD or AUD, which offers a premium over the historically low domestic interest rates in Japan.

This has the follow risks
- credit risk of the issuer
- FX risk, as the foreign currency coupon payments have to exchanged into JPY

They became popular in the 2000s.

2015- market size was USD 33bn.

23/11/2017 - Bank of Japan benchmark rate, -0.1%
23/11/2017 - Reserve Bank of New Zealand benchmark rate 1.75%
23/11/2017 - Reserve Bank of Australia benchmark rate 1.5%
23/11/2017 - Swiss National Bank benchmark rate -0.75%  (Banque Nationale Suisse)

The official benchmark rate in Switzerland is the "3m LIBOR CHF".

Japan's GPIF, world's largest pension fund, falls 3.8 per cent in the year

Japan's Government Pension Investment Fund (GPIF), worth $1.3 trillion, lost 5.3 trillion yen ($51bn) in the year ended March 31st, its worse annual result since the financial crisis.

The loss included a 10.8% loss on domestic equities and 9.6% on global equities. Japanese bonds, which the fund was cutting since October 2014, when it moved allocations more to equities, posted a 4.1% gain, following the Bank of Japan's move to negative interest rates.

The fund has 80% of its holdings in passive investments.

The Canada Pension Plan Investment Board (CPPIB), a retirement savings plan financed by employers and employees in Canada except Quebec, was created in 1966 and is sized at $278 billion as of March 31, 2016, fared better with a 3.4% return with gains in real estate and emerging-market equity private investments.

Trading GOI and KTB Bond Futures

INDIA - Government Bond Futures and Bills and Who can Trade Them

The National Stock Exchange (NSE) of India offers futures trading on government bonds (10-year) and (91-day) bills a.k.a. 91TDB. Trading members must be registered with SEBI to trade in the Currency Derivatives segment.

Price Quote Convention

Prices are quoted "clean" i.e. without considering accrued interest.

Settlement and Delivery of GOI Bond Futures

Bond futures settle on VWAP during the last thirty minutes of trading, or theoretical value. Note that the 10 year bond futures actually allows delivery of bonds with 8-11 years of residual maturity.

Clearing of Trades

Trades are cleared by NSCCL (National Securities Clearing Corporation Limited), a wholly owned subsidiary of the NSE incorporated in 1995, and the first clearing house to be incorporated in India, starting operations in 1996. Counterparty risk is avoided by cash settlement of the daily mark to market of open positions.

KOREA

Korean Bonds

AsianBondsOnline has good coverage of Korean Won bonds, and presentation of 2, 5 and 10 year yields. In Korea, all fixed income instruments are available to foreign investors.

Bond futures trade on KRX. They are known as KTB futures (Korean Treasury Bond futures), available in 3, 5 and 10 year varieties.

The wholesale market for KTBs is known as KTS (this is also the venue to trade Monetary Stabilisation Bonds, or MSBs and Deposit Insurance Fund Bonds (DIFBs)), and is limited to government bond dealers licensed by the Financial Services Commission (founded in 2008).

Global Bond Rally Pushes Yields to Low Levels

Investors are buying up sovereign debt as equities slide - sending US Treasuries yields to a one-year low. Bond indices, such as the BAML World Sovereign Bond Index also tumbled to 1.29 percent, it's lowest value since 2005. Japan's 10 year yields went negative.

Qatar Exchange to Start Trading GBonds

The Exchange already trades government bills, with maturities less than one year. Qatar Central Bank issues these bonds on behalf of the State of Qatar. Tradable units of these bonds will have a par value of 10,000 QAR (Qatari Riyal). One riyal is divided into 100 dirhams.

Worth mentioning a few facts on the current trading in bills... these are issued as a monetary policy tool, one of the applications is to regulate the money supply and influence interest rates. They are issued at a discount to face value. At maturity, the investor receives the full par value. The difference between price paid and par value represents the return to the investor.

BP goes Kangaroo

Kangaroo bonds are AUD bonds sold by international (non-Ozzie) issuers. BP's first issue takes place now with an A$500m issue at a coupon of 4.5% and is issued by BP Capital Markets (largest kangaroo issue this year, according to UBS, who are the joint "promoters" for the bond aka "bookrunners", together with ANZ). 75% allocation goes to asset managers and insurance funds. Part of the enthusiasm for issuing Kangaroos is the shift in the cross-currency basis swap.

Bond Yields Bubble Up in Greece

Bond yields in Greece bubbled ahead of the weekend's local government elections (10yr bond yield was 11.34%). Greece was bailed out in May by the EU and the IMF and today's bond yields are approaching those May highs when yields were over 12%. The EU and IMF are insisting wage and pension cuts and higher VAT and excise taxes.

Monitoring SWF World using SWF Insitute's Newsfeed

Listing of funds and news of what they are up to. News such as Glencore selling convertibles to Blackrock, GIC and Zijin Mining Company, China's third largest copper producer. Incidentally, the bonds they issued were December 2014 and convertible into Glencore shares upon an IPO or “other pre-determined qualifying events".

brightspark(fincrisis, X). ? X = posco

business(posco, X). ? X = koreanSteelMaker
founded( X, Y ). ? X = 1968, Y = taeJoonPark.
posco_bondissue = bondissue( Value, Term, Time ). ? Value = usd(700m), Term = years(5), Time = mar09.
concerns( posco_bondissue, X). ? X = shortTermNegativeOutlookSteelSector, heightendMilitaryTensionsPyongyang.

pyongyang == capital of north korea.

"First USD offering from an Asian corporate since Hong Kong & China Gas $1bn issue in July 2008" (source: financeasia).

The EUR yield curve shows falling yields

Dec08 has seen a flattening of the long-end of the EUR yield curve (term structure of interest rates for EUR) as shown from the ECB's animation. The bond price data comes from EuroMTS Ltd (a pan-European government bond trading platform). They publish a yield report showing e.g. yield on 2year and 5 year government bonds for Austria, Belgium , Finland, France etc.

Statistical data from the ECB can be found here.