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Bond Market News
Treasury Yields Dip on Iran Deal Optimism
May 21, 2026
US Treasury yields fell across the curve by as much as 9bp after a report indicated that US President Donald Trump’s negotiations with Iran were in the “final stages”. Brent crude prices dropped by 6% to trade above $105/bbl. Separately, the Fed’s April FOMC meeting’s minutes showed a hawkish tilt with a majority of officials warning that the Fed would likely need to consider hiking rates if inflation continued to run persistently above their 2% target. Besides, it also noted that “many” officials called for the Fed to drop its easing bias.
The risk-on sentiment boosted global equity markets. The S&P and Nasdaq ended higher by 1.1% and 1.5% respectively. US IG CDS spreads tightened by 1.4bp and HY CDS spreads were 7.5bp tighter. European equity markets ended higher too. The iTraxx Main CDS spreads were 1.9bp tighter and Crossover spreads tightened by 9.3bp. Asian equity markets have opened in the green this morning. Asia ex-Japan CDS spreads were 1.2bp tighter.
New Bond Issues
Yapi Kredi raised $500mn via a PerpNC5.5 AT1 bond at a yield of 9.375%, 25bp inside initial guidance of 9.625% area. The junior subordinated note is rated B- (Fitch). If not called by 26 November 2031, the coupon will reset to the US 5Y Treasury yield plus 509.3bp.
Alinma Bank raised $500mn via a PerpNC5.5 sustainability AT1 bond at a yield of 6.625%, 50bp inside initial guidance of 7.125% area. The junior subordinated note is unrated, and received orders of over $1.7bn, 3.4x issue size. If not called by 3 December 2031, the coupon will reset to the US 5Y Treasury yield plus 234.6bp. Proceeds will be used to finance and/or refinance eligible sustainable projects under its framework.
Oman Arab Bank raised $400mn via a PerpNC5.5 AT1 bond at a yield of 6.75%, 25bp inside initial guidance of 7% area. The junior subordinated note is unrated, and received orders of over $1bn, 2.5x issue size. If not called by 2 December 2031, the coupon will reset to the US 5Y Treasury yield plus 242.8bp.
PNC Financial raised $1.65bn via a dual trancher. It raised $1.35bn via a long 3NC2 bond at a yield of 4.618%, 22bp inside initial guidance of T+80bp area. It also raised $300mn via a long 3NC2 FRN at SOFR+68bp vs initial guidance of SOFR equivalent area. The senior unsecured notes are rated A3/A-/A. Proceeds will be used for general government purposes.
Republic of Congo raised $850mn via an 8Y bond at a yield of 9.99%, 51bp inside initial guidance of 10.5% area. The senior unsecured note is rated CCC+/CCC+ (S&P/Fitch). Proceeds will be used to fund the tender offer on its notes due 2032 and to refinance domestic securities.
Standard Chartered raised €1bn via a 6NC5 bond at a yield of 3.934%, 25bp inside initial guidance of MS+120bp area. The senior unsecured note is rated A3/BBB+/A. Proceeds will be used for general corporate purposes.
Bank of China (Sydney) raised $500mn via a 5Y FRN at SOFR+38bp, 62bp inside initial guidance of SOFR+100bp area. The senior unsecured note is rated A1/A/A. Proceeds will be used for general corporate purposes.
Rating Changes
- Fitch Upgrades Japfa to ‘BB-‘/’A+(idn)’, off Rating Watch Positive; Outlook Stable
- Moody’s Ratings downgrades Mexico’s ratings to Baa3 from Baa2, changes outlook to stable
- Fitch Downgrades Mercer International Inc.’s IDR to ‘CCC-‘
- Marfrig Global Foods S.A. Outlook Revised To Negative From Stable On Higher Expected Leverage; ‘BB+’ Ratings Affirmed
- BRF S.A. Outlook Revised To Negative From Stable On Same Action On Parent Marfrig; ‘BB+’ Ratings Affirmed
- Moody’s Ratings affirms CITIC Bank’s Baa2 deposit ratings; changes outlook to positive from stable
Term of the Day: Social Bonds
These are bonds issued by companies to specifically fund projects with social benefits (new/existing), which should be mentioned in the prospectus. ICMA’s social bond principles set out a standard covering four elements as follows:
– Use of proceeds (range of 6 categories but not limited to them)
– Process of evaluation and selection of social projects
– Management of proceeds
– Reporting
Talking Heads
On Favoring Japan’s 30-Year Bonds, Says Yield Curve ‘Too Steep’ – Marc Seidner, Pimco
“There is an excess risk premia that is attractive on an absolute basis and relative to many, many other markets”… “creates an interesting opportunity and an attractive valuation entry point to buy some 30-year JGBs… We think long bonds, the longs and super longs look quite good”
On Adding to Yen Longs on Intervention, BOJ Rate View – RBC BlueBay
“We are confident that the BOJ will now hike in June and we continue to expect intervention should that level break… the BOJ and Prime Minister Sanae Takaichi are running policy that is too dovish, or that the Ministry of Finance’s FX intervention has been a failure”
On Seeing June Hike Quite Likely If War Doesn’t End – Pierre Wunsch, ECB GC Member
“If the conflict isn’t resolved by June then I think the likelihood of a hike is quite high… At some point we will have to react because we are already at 3% inflation”.
Top Gainers and Losers- 21-May-26*
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