Credit spreads widened last week, in tandem with higher US Treasury yields, as investors sold bonds amid geopolitical tensions in the Middle East and the inflationary impact of higher oil prices. Additionally, spreads on Saudi Arabia and Oman widened by 3-7 basis points (bps) week-over-week following US strikes on three Iranian nuclear facilities. Retail flows were heavily skewed to buying front end papers. Overall, spreads widened by 2-8 bps. Asia investment grade bonds also experienced their spread widening 3-8 bps. Despite the risk-off environment, the Hyundai Capital America (HYNMTR) new issuance attracted strong participation, which saw a robust bid-to-cover ratio of 3.57. The new bonds also traded 0.10 points higher post primary issuance. We think the bonds performed strongly due to its attractive spread of more than 95 bps spread, which is higher than an average spread of 60-80 bps for an A-rating company. Philippine corporate bonds traded sideways, as dealers remained cautious amid escalating tensions in the Middle East. Retail investors showed interest primarily in front-end and belly maturities throughout the week.

• The US Federal Open Market Committee held its policy rate for the fifth consecutive meetings at 4.5% which is expected in a Bloomberg Survey
• The US Retail Sales came in lower than expected at –0.9% vs –0.6% in a Bloomberg Survey
• The US S&P Global US Manufacturing Purchasing Managers’ Index (PMI) came in slightly higher than expected at 52 vs 51 in a Bloomberg Survey