EM ASIA CREDIT: Adani Ports: Closing in on tights
(ADSEZ, Baa3neg/BBB-neg/BBB-neg)
Adani Ports bonds at the short-end have almost fully recovered from the Iran sanction story sell-off (see table), with investors now shrugging off the news given a robust response from the company, refocusing again on the possibility of $ bond tenders. In the table, we can see that the ADSEZ 7/27s rallied 92bp on the back of the tender news, gave back some of that when the company was implicated in possible Iran sanction breaches, and is now only 5bp away from the recent tights. Investors are at this point weighing up the possibility that the story resurfaces versus the timing of any future buybacks.
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CNH: USD/CNY Fixing Stead, Error Term Narrows
The USD/CNY fix printed at 7.2005, versus a BBG market consensus of 7.2147.
- This was little changed versus yesterday's outcome of 7.2008. Much of the adjustment came via the lower fixing error, which fell to -142pips and is the narrowest outcome since Nov last year.
- USD/CNH is back close to opening levels near 7.2100.
- Earlier we dipped to 7.1892 on headlines of US-China trade talks, but fresh monetary policy stimulus announced by the PBoC this morning (RRR cut and lower 7-day repo by 10bys) has provided an offset.
MNI: CHINA PBOC CONDUCTS CNY195.5 BLN VIA 7-DAY REVERSE REPO WEDS
- CHINA PBOC CONDUCTS CNY195.5 BLN VIA 7-DAY REVERSE REPO WEDS
AUSSIE BONDS: Solid Digestion Of Apr-37 Supply With More Demand
The latest ACGB April 2037 auction attracted strong demand, with the weighted average yield printing 0.50bps through prevailing mid-yields, according to Yieldbroker — continuing the recent trend of firm pricing across ACGB auctions.
- The cover ratio rose sharply to 4.6400x from 3.6688x at the previous auction, indicating stronger investor participation. This was further supported by a notable decrease in the number of successful bidders.
- As noted in our preview, the outright yield was around 5bps lower than at the prior auction and remained approximately 40bps below the November 2024 peak.
- Bidding strength came despite recent deterioration in sentiment toward longer-dated global bonds, as consistently strong US economic data has delayed expectations for Federal Reserve rate cuts.
- The 3s/10s yield curve was roughly 40bps steeper than at the last auction, though still about 20bps below its recent peak — potentially tempering demand for duration.
- In early post-auction trading, both XM futures and the bond line have richened by around 1bp.
