US high-grade slows down after Yellen roils markets

By Mike Gambale

NEW YORK (Frankfurt: HX6.F - news) , March 21 (IFR) - Treasury yields are slightly lower and equity futures are advancing this morning as the credit markets brace for a rare Friday trade from Standard Chartered. The multinational bank is expected to sell 30-year subordinated Tier 2 notes via Bank of America (TLO: BAC.TI - news) , Goldman Sachs (NYSE: GS-PB - news) , JP Morgan (Other OTC: MGHL - news) , Royal Bank of Canada (Toronto: RY-PC.TO - news) and Standard Chartered (HKSE: 2888.HK - news) itself. Initial price talk on the trade is T+230-235bp area, and books are already at USD2bn before the US open.

The US high-grade market has sold USD14.413bn so far this week, well off the recent USD30bn-plus pace thanks to the Fed meeting and subsequent press performance of Janet Yellen, who sparked a global sell-off with her remarks on Wednesday. The market will be welcoming some clarification on the Fed's position today as we hear from James Bullard (non-voter) at 1145am, Narayana Kocherlakota (voter) at 430pm and Jeremy Stein (voter) at 630pm.

Still, the technicals in the primary market remain intact, with the average high-grade bond holding a post-credit crisis low of T+121bp. Investors continue to pour money into corporate bonds as high-grade has seen inflows for the past 20-weeks in a row.

For the week ended 3/19, Lipper reported an inflow of USD2.203bn into corporate investment grade funds (YTD total of USD26.318bn). It was the fifth straight week of more than USD2bn coming into high-grade funds. Dow Futures: +46, S&P Futures: +5.50, Nasdaq Futures: +11.75 CDX IG22: 0.682bp wider, CDX HY21: 0.1212 point higher 10-yr UST yield: 2.772%, -0.3bp; 30-yr UST yield: 3.658%, -0.30bp

USD HIGH-GRADE PIPELINE

Standard Chartered PLC, expected security ratings A3/A-/A+, announced a USD benchmark 30-year subordinated tier 2 note offering via BAML/GS (KSE: 078935.KS - news) /JPM/RBC (MCX: RBCM.ME - news) /SCB. The books are open with pricing expected later today. Expected to price later today. Early redemption: Notes may be redeemed at the option of the Issuer prior to maturity for tax reasons or upon the occurrence of a Regulatory Capital Event.

Shinhan Bank, rated A1/A, has mandated Bank of America/Merrill Lynch, BNP Paribas (Milan: BNP.MI - news) , Credit Agricole CIBC, Citigroup (NYSE: C - news) , J.P. Morgan and Standard Chartered to arrange fixed income investor meetings in Asia, Europe and the U.S. after which a dollar-denominated 144A/REGS transaction might soon follow.

Suncorp Metway Limited (Suncorp Bank), rated A1/A+, has mandated Citigroup, Deutsche Bank (Xetra: DBK.DE - news) and RBC Capital Markets to arrange a series of investor meetings in Asia and the US. A capital markets transaction may follow, subject to market conditions.

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WELLPOINT RAISES FULL-YEAR EARNINGS FORECAST

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NIKE WARNS FX FLUCTUATIONS TO SLAM PROFIT

Nike Inc (NYSE: NKE - news) on Thursday warned Wall Street that growing pressures from weaker currencies in key emerging markets would take a big toll on its profit in the current quarter and into the next fiscal year. GLOBAL MACRO - European stocks extend recovery but animal spirits contained on unresolved Ukraine related tensions - Follows stronger session for Asian stocks although Tokyo markets were closed for a holiday - FTSE moves 0.41% higher as miners prosper on China stimulus hopes - Obama hits closest Putin allies with sanctions over Crimea - RTS - Italian Jan ind orders rebound 4.8% mom (prev -4.9%, exp -4.8%) - European synthetic credit markets improve, iTRAXX s-21 XOVER -11bp at 301bp - Portuguese/German 10-yr spread tightens by 3bp to hit fresh post crisis low - Greek yields ease modestly after S&P affirm B- rating (stable outlook) and signal possible uplift if growth picks up - Look for a range of 2.81% to 2.74% in 10s US DATA - There is no data scheduled to come out today EVENTS - 11:00 Fed outright Treasury coupon purchases (02/15/2036 - 02/15/2044) (USD1.00 - USD1.25bn) - 11:45 FRB St. Louis's Bullard (non-voter, hawkish) in panel on nominal GDP; Washington, DC - 13:45 FRB Dallas's Fisher (voter, hawk) on forward guidance; London - 16:30 FRB Minneapolis's Kocherlakota (voter, dovish) in panel on transitional monetary policy; Washington, DC - 18:30 Fed Governor Stein (voter, dovish) on financial stability and monetary policy (Reporting by Mike Gambale; Additional reporting by the IFR team; Editing by Marc Carnegie)