EM ASIA CREDIT: Adani Ports: Loan for possible buybacks
(ADSEZ, Baa3neg/BBB-neg/BBB-neg)
"Adani Units in Talks with MUFG for $250 Million Offshore Loans" - BBG
According to the article, Japanese bank MUFG will lend $100mn to Adani Ports and $150m to Adani Airports. According to Bloomberg the use of proceeds include for bond buybacks. The Adani Ports and Special Economic Zone board has previously approved a plan (end May) to tender $ bonds up to a maximum of $1bn over one or more tranches, spread over 6 quarters.
Spreads today are drifting wider, with bonds having performed well since the announcement of possible buybacks on the 28th May.
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US STOCKS: Futures Make Fresh Multi Month Highs
US equity futures breaking to fresh multi month highs in the first part of Tuesday trade, with Nasdaq futures slightly outperforming. We can't see any direct fresh catalysts for the move. In the cross asset space, US yields are a little higher, while the USD is firmer, particularly against the yen.
- As we noted earlier, dips continue to bought, even with the market looking overbought in the short term.
- Momentum type funds and share buybacks have kept the market well supported as an underweight market has been forced to reenter. Share buybacks are set to enter their blackout period in the middle of June, will this signal the potential for a pullback ?
CHINA: Central Bank Withdraws CNY255.9bn via OMO
- The PBOC issued CNY198.6bn of 7-day reverse repo at 1.4% during this morning's operations.
- Today's maturities CNY454.5 bn
- Net liquidity withdrawal CNY255.9 bn.
- The PBOC monitors and maintains liquidity in the interbank system through the issuance of reverse repo.
- The CFETS Pledged Repo Deposit Institutions 7 Day Weighted is at 1.41%, from yesterday's close of 1.51%.
- The China overnight interbank repo rate is at 1.35%, from the prior close of 1.33%.
- The China 7-day interbank repo rate is at 1.53%, from the prior close of 1.45%.
AUSTRALIA DATA: Lower Rates/Inflation Cautiously Boosting Confidence
Westpac’s measure of consumer confidence rose 0.5% in June to 92.6 after May’s 2.2% increase boosted by 50bp of RBA easing this year and lower inflation. The index is at its highest since January but still 1.8% below that level as global events have weighed on sentiment.
- The survey was taken after the RBA cut rates on May 20, which likely supported sentiment this month. This and lower inflation are reflected in the 7.5% m/m pickup in “time to buy a major purchase” to 100.2. Westpac expects the Board to remain cautious and be on hold in July with the next easing in August.
Australia Westpac consumer confidence
- While consumer confidence is improving, global events continue to be a dampener. Westpac asked about news recall this month and for “international conditions” 77% assessed it as “unfavourable”, a 3-year high. Forward-looking components of consumer sentiment also were more negative than current ones, reflecting elevated global uncertainties around the outlook.
- 63% assessed news reports around inflation as “unfavourable” down 2pp since March and 13pp since December. Interest rate news was seen as more positive than negative for the first time since 2021.
- Unemployment expectations rose 5% m/m to 127.4, just below the series average of 129.
- Family finances compared to a year ago rose 0.5% m/m, while over the coming year they fell 1.9%. This is despite around 80% of respondents expecting rates to fall over the year.
- “Time to buy a dwelling” rose 3.6% m/m, while house price expectations jumped 7%, highest since 2013.
