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The Bank of Japan (BOJ) has experienced a record-breaking paper loss of ¥10.5 trillion ($70.7 billion) on its bond holdings, the largest loss since fiscal 2004. This poses a challenge for Governor Kazuo Ueda as he considers normalizing policy. The loss is not expected to deter Ueda from reducing stimulus if the bank's inflation goal is achieved, but it highlights the difficulties the central bank may face when it eventually moves towards an exit strategy. The BOJ's massive bond holdings, which make up over half of the central government's outstanding debt, are vulnerable to even a small increase in yields. On the other hand, the BOJ has seen unrealized gains from its holdings of exchange-traded funds, reaching a record ¥23.6 trillion. Despite the losses, Ueda has expressed confidence in the financial situation of central banks, emphasizing the need for responsible financial management to maintain credibility in the markets. [Extracted from the article]

A recent controversy in the world of quantitative investing has raised doubts about the accuracy of a widely cited paper on bond market returns. Alex Dickerson, a doctoral student at Warwick Business School, discovered errors in the influential paper by three Georgetown University professors. The errors invalidated the paper's findings and led to its retraction by the Journal of Financial Economics. This incident highlights the replication crisis in finance and raises questions about the validity of factors used in bond investing. Despite the uncertainties, systematic credit investing remains a growing business. [Extracted from the article]

Country Garden has managed to avoid its first offshore bond payment failure and reschedule local debt in recent months, though investors are bracing for delinquencies and a likely debt overhaul. The company also put up a short video clip, in which Yeung was accompanied by Country Garden President Mo Bin. [Extracted from the article]

Currently for the biggest US banks, none of the unrealized losses impact profit, but the ones in the AFS books do hit common equity. The recent surge in yields - which abated somewhat this week - has renewed investor focus on unrealized losses, a key issue during the turmoil that struck regional banks from March. (Bloomberg) -- After investment losses tore through the US financial system this year, a fresh slump in bank stocks shows some investors fear the problem - which at its most extreme claimed a handful of lenders - hasn't gone away. [Extracted from the article]

(Bloomberg) -- Indian sovereign bonds slumped as the central bank's choice of relatively illiquid papers for its bond-purchase program disappointed traders. The yield on the 5.63% bond maturing in 2026 rose as much as 13 basis points to 5.89%, while the 6.64% 2035 bond yield climbed eight basis points. [Extracted from the article]

India's yield curve has been nearly flat even amid record borrowing by the government as insurers stepped up purchases of long-term bonds. (Bloomberg) -- India's auction of the debut 50-year bond met with strong demand Friday, underscoring growing interest from insurance and pension funds for ultra-long papers. [Extracted from the article]

SBI Pension Funds Pvt., which manages $50 billion in assets, is considering investing in corporate and state debt due to the narrowing spreads on longer-maturity Indian government bonds. The fund's chief investment officer, Sandeep Pandey, expressed concern that the lack of term premium for longer-dated securities could impact returns for subscribers. Demand for longer-tenor papers has increased, leading to a compression in the spread between 10-year and 30-year bonds. The fund currently holds a portfolio of about one trillion rupees in corporate paper and 2.5 trillion rupees in sovereign and state debt. [Extracted from the article]

"We therefore believe that the next policy decision the BOJ takes will likely be a major one - such as changing long-/short-term policy rate targets or terminating yield curve control altogether." (Bloomberg) -- Japan's two-year yield rose above zero for the first time since 2015, bringing the global era of negative yields closer to an end. [Extracted from the article]

The Fed had to similarlysupport the commercial paper market after Lehman Brothersfailed. (Bloomberg) -- Blue-chip companies that need to borrow inthe US now are increasingly relying on short-term IOUs toavoid locking in longer-term borrowing costs in a marketbeset by turbulence. [Extracted from the article]

Home Depot Inc. plans to take on $12.5 billion of debt to finance its acquisition of building-products distributor SRS Distribution Inc. The company intends to use cash on hand, as well as new commercial paper and unsecured notes, to fund the deal. The acquisition is valued at approximately $18.25 billion and is expected to be completed in early 2025, pending regulatory approvals. Home Depot aims to maintain its investment-grade ratings and reduce leverage through debt repayment and Ebitda growth. The acquisition aligns with Home Depot's strategy to target professional contractors in the market. [Extracted from the article]

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(Bloomberg) -- China Evergrande Group avoided what would have been its first default on a public onshore bond as a unit got investor backing to delay repayment of a 4.5 billion yuan ($707 million) note. Bond (4:05 p.m. HK) Chinese developer Country Garden Holdings failed to find enough demand for a potential $300m convertible bond, according to a report by IFR. The share placement has done little to restore investor confidence in the firm's longer-term financial health, even though funds will be used in part to repay some loans. [Extracted from the article]

(Bloomberg) -- Swedish debt collector Intrum AB is tapping bank credit lines for funding as selling commercial paper becomes more challenging. "This is not the first time that the commercial paper market is closed for Intrum, hence leaving it with no alternative sources of fresh financing", he said. [Extracted from the article]

(Bloomberg) -- South Korea pledged at least 50 trillion won ($34.7 billion) in support for credit markets that have been strained by rising interest rates, stepping in to reduce the risk of defaults weighing on the economy. Korea will resume purchasing commercial paper and corporate bonds from Monday, first injecting 1.6 trillion won from a 20 trillion won bond stabilization fund, Choo said. [Extracted from the article]

Purpose: Considering that listed companies are the main body of natural resource consumption and pollutant emission, this study aims to explore the stock price effect and source channels of green bond issuance of listed companies. This is extremely necessary to promote listed companies to actively fulfill their environmental responsibilities so as to achieve sustainable economic and social development. Design/methodology/approach: In this paper, the companies that issued green bonds in Shanghai and Shenzhen stock markets in China from 2016 to 2018 are used as samples. First of all, the authors adopt the event study method and match the two models to prove that there is a stock price effect in green bond issuance. Then, the authors introduce the general regression model to analyze the sources of the stock price effect of green bond issuance in detail through three channels: "financing cost," "investor attention" and "fundamental." Findings: In the above three channels, the "investor attention" channel can well explain the stock price effect of green bond issuance. Meanwhile, the authors also find that the stock price effect of the subsequent issuance of green bonds is more significant than that of the first time, non-financial companies are more pronounced than financial companies, public issuance are more obvious than private issuance, state-owned companies are more notable than non-state-owned companies, small-scale companies are more evident than large-scale companies and companies with high equity concentration are clearer than those with low equity concentration. Originality/value: Taking China as the research object for the first time, this paper comprehensively employs the capital asset pricing model and Fama–French five-factor model to discuss the stock price effect of green bond issuance of listed companies. Secondly, this paper also studies whether the way of green bond issuance, the type and size of the company, as well as the degree of ownership concentration will have different effects on the stock prices of listed companies. The research results provide new ideas and methods for the stock price effect of green bond issuance. [ABSTRACT FROM AUTHOR]

"You can own commercial paper - that six-month, nine-month commercial paper and clip over 6% yield, which is pretty incredible", BlackRock global fixed income chief investment officer Rieder said on Bloomberg Television's ETF IQ. (Bloomberg) -- "Higher for longer" has exchange-traded fund investors dumping short-dated debt en masse ahead of what's widely expected to be the Federal Reserve's last interest-rate hike. [Extracted from the article]

(Bloomberg) -- A hawkish pivot by the Indian central bank has money managers scurrying to find safer bets while bracing for potentially the steepest rate hikes in Asia. The yield spread between three-year government papers and similar top-rated company bonds had turned negative in April from around 87 basis points in August, according to Bloomberg data. Yields have risen, and stocks pared gains since the Reserve Bank of India shifted focus to inflation from growth in April and indirectly tightened policy by introducing a higher floor interest rate. [Extracted from the article]

Commercial Paper Three-year government bond yields slid 19 basis points to 4.31% while 10-year rates dropped 16 basis points to 4.49%. (Bloomberg) -- South Korean assets rallied on Monday after the government pledged at least 50 trillion won ($34.8 billion) to prop up credit markets, easing concerns about rising default risks in key sectors including real estate. [Extracted from the article]

"If China doesn't tamper with the outflows and the market infrastructure holds up well, then this might ultimately increase the reputation of China's domestic bond market in the eyes of foreign investors." (Bloomberg) -- China's gradual approach to opening its bond market led some foreign investors to start viewing Chinese bonds as more akin to debt from developed nations rather than emerging markets, but the continuation of that reputation depends on how Beijing handles this year's record sell-off by foreigners. [Extracted from the article]

Dutch pension funds, which are the largest in the region with over €1.5 trillion in assets, are investing heavily in long-dated swap contracts. This is causing a disruption in one of this year's popular trades. The funds are likely doing this to hedge against increasing liabilities. The recent announcement by PFZW, the second-largest fund in the Netherlands, about a significant increase in pension payments starting in 2024 has led to speculation that other funds will follow suit. This has resulted in a flattening pressure on the swap curve. The lack of supply of core cash paper and the decision by the Netherlands not to issue more bonds this year have also contributed to the situation. While the bids from Dutch funds have affected the euro swap markets in the short term, it is believed that PFZW is an outlier among its peers, with other funds suggesting smaller adjustments. Additionally, pension funds are not only investing in swaps but also in other long-end securities such as green government bonds. [Extracted from the article]

The yield spread between three-year government papers and similar top-rated company bonds had turned negative in April from around 87 basis points in August, according to Bloomberg data. (Bloomberg) -- A hawkish pivot by the Indian central bank has money managers scurrying to find safer bets while bracing for potentially the steepest rate hikes in Asia. Yields have risen, and stocks pared gains since the Reserve Bank of India shifted focus to inflation from growth in April and indirectly tightened policy by introducing a higher floor interest rate. [Extracted from the article]

Bolivia is considering selling up to $1 billion in green bonds in New York this year to finance the mining of lithium, a key component in electric vehicle batteries. The country hopes that by tapping into the demand for clean-energy investments, it can lower borrowing costs to 10% or lower. Bolivia has the world's largest lithium deposits, but extracting it in commercial quantities has been challenging due to high levels of magnesium in the brine and the distance to the nearest port in Chile. Despite political and social unrest and a state-led approach to natural resources, Bolivia's sovereign bonds have performed well this year. However, they still trade at distressed levels. The government believes its outstanding bond schedule is manageable and has demonstrated its willingness to honor obligations. Congress approved a sovereign bond sale last year, but future borrowing may be more difficult due to political divisions within the ruling socialist party. Bolivia narrowly avoided a financial crisis last year by selling half of its gold reserves, and the central bank has nearly depleted its cash reserves. The country's currency peg of 6.9 bolivianos per dollar exists on paper but is not easily accessible in practice. Black market currency traders are offering dollars for more than 8 bolivianos each. Bolivia has low inflation, but economists predict a spike in consumer prices due to the dollar shortage. The government plans to subsidize fuel, electricity, and food to mitigate inflation. [Extracted from the article]

(Bloomberg) -- Reliance Industries Ltd. is finalizing plans to raise up to $3 billion via an offshore bond issue, the Economic Times newspaper reported. While the exact pricing of the bonds has not been made available, there are expectations the 10-year debt may be offered at about 110 to 130 basis points over the U.S. Treasury benchmark, and the 30-year debt may be at 130 to 140 basis points over similar-maturity Treasuries, the Economic Times said. The company is expected to use the proceeds from the sale to refinance loans maturing in the next three to four months to save on interest costs or extending maturities, the paper said. [Extracted from the article]

(Bloomberg) -- As the global debt selloff deepens, T. Rowe Price Group Inc. is finding shorter-maturity bonds a safer bet amid expectations of a further rise in US Treasury yields and corporate defaults. So if everyone's in the trade, it's tough to differentiate or find opportunities" "We are finding a lot of high yield secured paper trading in high single digits or even double digit yields that can be secured by some assets that we are happy to underwrite even if we go through a downturn" ©2023 Bloomberg L.P. [Extracted from the article]

BlackRock, the world's largest asset manager, has stated that investors should rely more on actively managed strategies due to higher interest rates, persistent inflation, and geopolitical risk. They argue that static asset allocations and passive portfolios will not deliver as they have in the past. The analysts emphasize the importance of getting the asset mix right and contend that "mega forces" are keeping interest rates above pre-pandemic levels. While some top executives agree with this perspective, the trend among investors has been to shift away from actively managed funds towards passive products. BlackRock acknowledges that finding skilled portfolio managers can be costly and suggests that budget-constrained investors consider index building blocks instead. [Extracted from the article]

Greece has received record demand for its first new bond since regaining investment grade, with €35 billion ($37.9 billion) in orders for a syndicated sale of 10-year paper. This surge in demand is attributed to speculation that the European Central Bank may lower interest rates in April, prompting investors to seek government bonds. Greece's strong economic growth and ongoing fiscal adjustments have also contributed to the high demand for its bonds. The new Greek bonds also qualify for the ECB's bond-buying program, further attracting investors. [Extracted from the article]

Bank shares, assumed to be redoubts of safety in a rising-rate world, led the plunge, posting their worst week since the Covid crash. But banks have emerged as an exception to that hope as higher rates saddle lenders with paper losses on bond portfolios and lure depositors away. (Bloomberg) -- It's one thing when crypto gets flattened by a fired-up Federal Reserve, or moonshot online stocks fall back to earth as rates soar. [Extracted from the article]

(Bloomberg) -- Logan Group Co. plans to dispose of about 6 billion yuan ($949 million) of assets amid a liquidity squeeze, The Paper reported, joining other builders that are seeking to raise money through divestments. As worries mount about debt repayments from multiple property firms, Bloomberg Intelligence says the shutting of onshore and offshore bond markets to distressed developers for fundraising could threaten their survival. [Extracted from the article]

So-called SLBs - which mean issuers pay higher interest if they fail to meet sustainability goals - lend themselves to transformational projects such as curbing deforestation, the paper said. (Bloomberg) -- The Brazilian government should issue an innovative sustainability-linked bond to curb deforestation in the Amazon rainforest, according to researchers at the World Bank. [Extracted from the article]

The Reserve Bank of India bought 100 billion rupees of the 6.64% 2035 bond at 6.5881% as against 6.58% estimated in a Bloomberg poll and purchased another 110 billion rupees of the 2026 bond at a 5.5442% yield. (Bloomberg) -- India's central bank sold a planned 320 billion rupees ($4.4 billion) of bonds at its weekly sale on Friday, with many traders expecting the monetary authority to buy off the stock later. [Extracted from the article]

For example, CMBS known as single-asset, single-borrower trades, which are often linked to a single trophy office building, have offered higher yields this year than other asset-backed debt and corporate paper. (Bloomberg) -- It's become nearly impossible to find yield amid the ongoing spread compression across credit markets. [Extracted from the article]

Key Developments: Chinese Developer Sunac Misses its First Bond Payment Deadline China Developers' High-Yield Dollar Bonds Decline 2-4 Cents China's Li Issues Third Warning on Growth as Covid Takes Toll Zhenro Defaults for First Time After Missing Bond Payments China Developers Need to Change as Market Seen Shrinking: Paper Chinese Developer Sunac Misses its First Bond Payment Deadline (4:14 p.m. HK) Bondholders hadn't received payment for a coupon initially due Monday, according to people familiar with the matter who asked not to be identified because they're not authorized to speak about it. (Bloomberg) -- Chinese developer Sunac China Holdings Ltd. missed its first payment on a dollar bond since concerns about the firm's financial health emerged late last year. [Extracted from the article]

(Bloomberg) -- Chinese high-yield dollar bonds declined for a second day, as a three-week rally loses steam amid a worsening Covid outbreak and fading optimism over policy support measures. Key Developments: China Developers' High-Yield Dollar Bonds Decline 2-4 Cents China's Li Issues Third Warning on Growth as Covid Takes Toll Zhenro Defaults for First Time After Missing Bond Payments China Developers Need to Change as Market Seen Shrinking: Paper China Developers' High-Yield Dollar Bonds Fall (1:51 p.m. HK) Chinese high-yield dollar bonds fell further Tuesday, with drops of 2-4 cents on the dollar in the property sector according to credit traders, as a recent rebound continues to fade. China Junk Bonds Extend Slide (10:25 a.m. HK) Chinese high-yield dollar bonds dropped 0.5 to 2 cents on the dollar Tuesday morning, according to credit traders. [Extracted from the article]

Chinese developer Country Garden Holdings Co. has missed a coupon payment on a yuan bond for the first time, according to anonymous sources. The company is already facing a lawsuit seeking its liquidation offshore. Country Garden had previously defaulted on its dollar debt in October but had managed to avoid defaulting on its local-currency obligations. The company's crisis has deepened as sales have plummeted, and now attention is turning to China Vanke Co., another state-backed builder that is in talks with creditors to avoid default. [Extracted from the article]

The weighted average call rate, which the Reserve Bank of India closely monitors, has held above the policy rate for most of the past month and even breached the emergency funding rate of 6.75% on some days. Yields on shorter commercial paper declined between five and 10 basis points while rates on treasury bills also retreated in secondary trading, traders said. (Bloomberg) -- India's shorter bonds rallied and money market rates eased on bets that a withdrawal of the nation's highest value currency note would leave banks with surplus cash to invest. [Extracted from the article]

A cool-down in real estate has pressured the project finance asset-backed commercial paper market and some lower-rated builders, as well as financiers related to troubled projects. (Bloomberg) -- South Korean financial regulators are likely to extend market stabilization measures they have taken since October to counter growing threats including a slump in real estate and the offshore crises of Silicon Valley Bank and Credit Suisse Group AG. [Extracted from the article]

(Bloomberg) -- India may sell as much as 250 billion rupees ($3 billion) of green bonds in the next fiscal year and plans to include longer maturity debt to the offering, according to people familiar with the matter. While the finance ministry has assumed green issuances at 1.6% of the overall borrowing of 15.43 trillion rupees next year, the officials said that the actual offering would depend on demand. [Extracted from the article]

Li Shao Yu agreed on Nov. 17 to buy Evergrande's 18% stake in the internet services firm for HK$2.13 billion ($273 million) at the discounted price of HK$1.28 a share. (Bloomberg) -- The buyer of China Evergrande Group's stake in HengTen Networks Group Ltd. is sitting on a paper profit of $582 million after the shares surged in the wake of the sale. Hong Kong clearing data showed founder Hui Ka Yan may have pledged a stake worth $1 billion in Evergrande last week. [Extracted from the article]

(Bloomberg) -- To the investors who are pouring into environmentally friendly debt funds, the $100 million "green bond" sale for a paper mill in Michigan this month probably seemed like a good fit. Green Principles Though the bonds were designated as "green" the debt was not aligned to any industry association's accepted green bond principles, according to bond documents. [Extracted from the article]

Keywords: ASIA; BON; BUSINESS; FRX; JAPAN; MARKETS; WORLD EN ASIA BON BUSINESS FRX JAPAN MARKETS WORLD Overseas funds bought the second-highest amount of Japanese government bonds on record in June as enhanced returns using cross-currency basis swaps and index-linked demand fueled inflows. Overseas investors buying five-year JGBs using cross-currency swaps funded in euro or the Aussie dollar can earn around 50 basis points more than from similar-maturity German or Australian paper. QWIVMXT0G1KW (Bloomberg) -- Overseas funds bought the second-highest amount of Japanese government bonds on record in June as enhanced returns using cross-currency basis swaps and index-linked demand fueled inflows. [Extracted from the article]

The article discusses the increasing difficulty in cracking the risk models behind the best hedge fund strategy of 2023, which is tied to insurance-linked securities, particularly catastrophe bonds. These bonds transfer the risk of large losses from the insurance industry to investors, who can potentially earn significant returns if a catastrophe does not occur. However, calculating catastrophic risk has become more complex due to the growing concentration of property in areas prone to frequent storms, fires, and floods. Models designed to measure cat bond risk are not consistently capturing secondary perils, such as destructive thunderstorms, which are becoming more significant in terms of losses. This has implications for investors who are adding exposure to cat bonds. The article also highlights the increasing importance of secondary perils in climate science and the challenges in modeling these weather events due to the lack of historical data. The shifting pattern of natural perils may deter new capital from entering the cat bond market and cause existing investors to reassess their commitment to cat bonds. [Extracted from the article]

South Africa has announced plans to tap into the central bank's contingency reserves in order to lower the government's debt trajectory and borrowing requirements. This move has led to a strengthening of the rand and a drop in local bond yields. By using funds from the Gold and Foreign Exchange Contingency Reserve Account, the government aims to decrease the amount of debt auctioned at weekly sales and borrow less to fund deficits. However, there are concerns that this decision may leave the country more vulnerable to future shocks. [Extracted from the article]

Kenya plans to raise 70 billion shillings ($429 million) through the sale of infrastructure bonds next month. The bonds will be tax-free and will fund various development projects in the country. The Central Bank of Kenya is expected to announce the offer soon, and the terms of the bond may change. Kenya has previously raised 397 billion shillings through infrastructure bonds to finance projects such as road construction and water supply. The most recent bond auction saw 6.5-year securities sold at 17.9%. [Extracted from the article]

The Bank of Korea will provide as much as 2.5 trillion won of liquidity via repo transactions to participating firms, Finance Minister Choo Kyung-ho, Bank of Korea Governor Rhee Chang-yong, and heads of financial regulators said at a joint press conference on Monday. (Bloomberg) -- South Korea's financial companies will contribute a second round of financing to stabilize the credit market, injecting an additional 5 trillion won ($3.7 billion) into a fund, according to the Finance Ministry. Officials responded with the aid fund to boost liquidity in late October, relaxed the collateral standard for securities used in repo transactions with the central bank and asked companies to refrain from selling new bonds. [Extracted from the article]

Foreign investors can buy India's green bonds through the Fully Accessible Route, one of the people said. A Federal Reserve paper this year found green bonds have a yield spread that is eight basis points lower on average relative to conventional bonds. (Bloomberg) -- Reserve Bank of India, the nation's debt manager, is preparing to sell its first ever batch of sovereign green bonds as early as next month, according to people with knowledge of the matter. [Extracted from the article]

A 2018 Fed research paper first highlighted the importance of this forward curve as a more reliable recession indicator than traditional yield curves, and Powell brought investors' attention to it earlier this year. (Bloomberg) -- A part of the yield curve that Federal Reserve Chair Jerome Powell watches closely to monitor recession risks inverted for the first time since the pandemic hit the US in early 2020. [Extracted from the article]