SSAR
US DOLLARS
Jun 4 2019 CDPQ US$2bn Jun 11 2021 2.125 99.99 MS+19 / T+22.65 2.13
Jun 5 2019 SEK US$650m Dec 14 2020 3mL+5 100 3mL+5 -
Jun 6 2019 IADB US$500m Mar 15 2022 3mL+3
EUROS
Jun 3 2019 Lower Saxony €750m incr
(€1.25bn)Apr 8 2027 0.125 100.578 MS-8 / B+45.1 0.051Jun 4 2019 Schleswig-Holstein €500m Jun 12 2029 0.125 98.983 MS-7 / B+44.1 0.228
Jun 5 2019 KfW €5bn Jul 4 2024 0 101.624 MS-18 / B+28.5 -0.318Jun 6 2019 Lower Saxony €250m incr
(€1bn)Jun 14 2021 0 - - -Jun 7 2019 EIB €250m incr
(€3.25bn)Mar 15 2024 0 101.88 MS-22 / B+22.8 -GLOBAL BOND SUMMARY DETAILS: WEEK ENDING 7/6/2019
Pricing date Issuer Amount Maturity Coupon (%) Reoffer Spread (bp) Yield (%)7IRELESSûTELECOMSûlRMûVERIZON widened
pricing on the US$855m AAA rated senior
tranche of its handset receivables
TRANSACTIONûTOûBPûOVERûINTERPOLATEDûSWAPSû
on Tuesday, from initial price talk of 30bp
over.
ALLY sold the senior one-year tranche of its
US$1.11bn prime auto loan deal at 25bp
over swaps on Tuesday, wide of guidance at
22bp area.
GENERAL MOTORS also priced at the wide end
of guidance on the senior tranche of its
US$800m sub-prime auto deal, which was
priced at 38bp over interpolated swaps.
A rally in rates and the inverted yield curve
is to blame for softer demand for senior
bonds, according to analysts and investors.
h'ENERALLYûSPEAKING ûDEALSûAREûSTRUGGLINGû
due to the curve inversion and swap levels
PARTICULARLYûONûSENIORûTRANCHES vû0ETERû
+APLAN ûPORTFOLIOûMANAGERûATû-ERGANSERû
#APITALû-ANAGEMENT ûTOLDû)&2
h4HEûYIELDûCURVEûISûAûMESS vûWROTEû7ELLSû
&ARGOûCONSUMERû!"3ûANALYSTû*OHNû-C%LRAVEYû
in a research note.
Short-dated ABS buyers may be holding
OFFûUNTILûTHEûMARKETûSTABILIZES ûHEûSAID
h7EûBELIEVEûLOWERûRATESûANDûCURVEû
inversion have created more meaningful
headwinds for investors in AAA bonds.
Concerns about rates snapping back may be
keeping AAA buyers on the sidelines
compared to deeper credit buyers.”
Senior bonds usually hold up better in
periods of market weakness compared with
riskier junior bonds.
But subordinate bonds are drawing a
better bid because they offer higher spreads,
which helps compensate for lower rates,
Kaplan said.
Last week, two-year AAA prime auto
bonds underperformed single-A tranches by
7bp, the second largest one-week move in
terms of spread differential since 2000,
ACCORDINGûTOû-C%LRAVEY
Still, new deals continued to surface in
the primary market as the week wore on.
GLOBAL JET CAPITAL mandated Citigroup, Bank
of America Merrill Lynch, Deutsche Bank and
Morgan StanleyûONû7EDNESDAYûTOûARRANGEûITSû
third aircraft ABS, BJETS 2019-1.
The US$517.1m deal was expected to be
announced before the end of the week.
TOYOTA also mandated Citi, Barclays, JP
Morgan and TD to arrange a debut US$950m
revolving auto loan deal backed by longer
term loans that are excluded from its
regular auto ABS shelf. The deal is expected
to be announced early this week.RATINGS DIVERGE ON MARKETPLACE
LOAN ABSRating agencies are increasingly disagreeing
over how to assess risks in marketplace loan
securitisations, resulting in divergent views
on the growing asset class.
&ITCH ûWHICHûHASûNOTûBEENûMANDATEDûTOû
rate any such deals this year, has been
particularly vocal about the risks for online
marketplace loan platforms.
Because the asset class largely emerged
AFTERûTHEûLASTûlNANCIALûCRISIS ûITûHASûAûSHORTû
operating history and still faces an uncertain
regulatory backdrop, say some critics.
&ITCHûWARNEDûRECENTLYûTHATûLOOSENINGûTHEû
rating metrics in the asset class as it matures
WASûNOTûJUSTIlED
)NûAûREPORTûPUBLISHEDûONû-AYû ûITûSAIDû
that the credit enhancement in A rated
marketplace loan ABS tranches has declined
“meaningfully” since 2017, which is
“unwarranted” given the stable collateral
performance and limited track record.
“Bondholders of more recently issued
transactions have less loss protection for the
SAMEûAMOUNTûOFûASSETûRISK vûWROTEûTHEû&ITCHû
analysts.
“The sector is still unproven against the
magnitude of macroeconomic stressconsistent with investment-grade ratings,”
they said.
The asset class has also seen some
instances of underperformance compared
with originator expectations, shifts in
underwriting standards and regulatory
CHALLENGES û&ITCHûSAID
30 ûONûTHEûOTHERûHAND ûSAIDûONû-ONDAYû
that the growing track record of online
marketplace loan platforms and improved
compliance functions were helping mitigate
some of the risks in the growing sector.
The maximum rating the agency would
ASSIGNûTOû-0,ûSECURITISATIONSûHASûINCREASEDû
as a result, it said.
h7EûHAVEûOBSERVEDûAûGROWINGûNUMBERûOFû
mitigants to these risks over the last few years, and
also have an increased amount of performance
DATAûFROMûBOTHû-0,ûPLATFORMSûANDûSECURITISATIONSû
OFûTHESEûASSETS vûWROTEû30ûANALYSTû$OUGû0ATERSONû
INûTHEûREPORTûPUBLISHEDûONû-ONDAY
Kroll, which has rated most of the new
deals sold so far this year, also said that
operational improvements and tighter
underwriting had made credit performance
more predictable in the industry, leading to
higher ratings.
4HEûAGENCYûSAIDûINûAûREPORTûONû-AYûûTHATû
lower credit enhancement requirements
that result from this are “consistent with the
evolution of a maturing sector”.GROWING ASSET CLASS
Seven marketplace loan platforms have raised
FUNDINGûINûTHEû!"3ûMARKETûTHISûYEARû9EAR
TO
DATEûSUPPLYûISûCLOSEûTOû53BN ûPUTTINGûITûONû
track to surpass last year’s record US$8.3bn,
WROTEû*0û-ORGANû!"3ûANALYSTSûONû-ONDAYû
That is up from just US$3bn in 2016.
Ratings in the asset class are dominated
by the smaller agencies. According to data
FROMû*0û-ORGAN û+ROLLû"ONDû2ATINGû!GENCYû
has rated 92% of the transactions sold this
YEAR ûWHILEû$"23ûHASûINCREASEDûITSûSHAREû
FROMûûINûûTOûûTHISûYEAR