US 2Y, 10Y Yields Breach 4% and 4.5% Mark

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May 15, 2026

Credit Ratings
Macro News

US Treasury yields continued to march higher across the curve – the 2Y yield crossed the 4%-handle and the 10Y crossed the 4.5%-handle, marking their highest levels since nearly a year. Markets are now pricing-in about 15bp in Fed rate hikes by the end of the year amid concerns about inflationary pressures. On the data front, the Import Price Index rose by 1.9% MoM in April, much higher than expectations of 1.0%. The Export Price Index rose by 3.3%, much higher than the surveyed 1.2%. Both the readings were at their highest level in four years, with petroleum & petroleum products rising by 19%. Separately, Retail Sales rose by 0.5%, inline with expectations. Initial jobless claims for the prior week rose by 211k, worse than the surveyed 205k.

Looking at US equity markets, the S&P and Nasdaq ended higher by 0.8-0.9%. US IG CDS spreads were nearly flat while HY CDS spreads were 22bp tighter. European equity markets ended higher too. The iTraxx Main CDS spreads were 0.8bp tighter and Crossover spreads tightened by 5.1bp. Asian equity markets have opened mixed this morning. Asia ex-Japan CDS spreads were 0.8bp tighter.

New Bond Issues

Nan Fung raised $500mn via a 10Y sustainability bond at a yield of 5.863%, 33bp inside initial guidance of T+175bp area. The senior unsecured note is rated Baa3. An amount equivalent to the net proceeds will be used exclusively to finance or refinance eligible new and existing green/social assets in accordance with its framework.

Credit Agricole raised S$325mn via a 12NC7 Tier-2 bond at a yield of 3.3%, 30bp inside initial guidance of 3.6% area. The subordinated note is rated Baa1/BBB+/A-. The note has a clean-up call if 75% of the initial nominal amount of the note is redeemed or bought back.

Hanwha Q Cells raised $350mn via a 3Y bond at a yield of 4.452%, 32bp inside initial guidance of T+75bp area. The senior unsecured notes are rated Aa2/AA (Moody’s/S&P), and are guaranteed by the Export-Import Bank of Korea. Proceeds will be used to finance or refinance new or existing renewable energy projects in accordance with its green financing framework.

DIRECTV raised $1.4bn via a 6NC2 bond at a yield of 9.25% vs. initial guidance of 9-9.25% area. The senior unsecured note is rated B1/B+/BB+. Proceeds, together with cash on hand, will be used to complete its cash tender offer for up to $1.4bn of its outstanding 2027s and up to $200mn of its 2029s. The proceeds may also be used to reduce trade finance debt.

Pampa Energia raised $500mn via a tap of its 7.75% 2037s at a yield of 7.6% vs. initial guidance of high-7% area. The senior unsecured note is rated B-/B+ (S&P/Fitch). Proceeds will be used to finance capex and/or for any further acquisitions or integration of working capital located in Argentina. It may also be used to refinance existing debt.

New Bonds Pipeline

Republic of Congo offshore bond

Rating Changes

Vedanta Resources Upgraded To ‘BB’ On Improving Operating Performance And Liquidity; Outlook Stable
Fitch Upgrades Telecom Italia to ‘BB+’; Stable Outlook
Moody’s Ratings upgrades Tesco’s ratings to Baa2 from Baa3 on strong performance and lower leverage; outlook stable
Fitch Upgrades EDEMSA’s LC & FC to ‘B’ and ‘B-‘; Upgrades Sr. Unsecured Notes ‘B’/’RR3’
Fitch Upgrades EDENOR’s LC & FC IDRs to ‘B’ and ‘B-‘; Upgrades Sr. Unsecured Notes to ‘B’/’RR3’
Kosmos Energy Ltd. Upgraded To ‘B-‘ From ‘CCC’ On Improved Credit Profile Supported By Higher Oil Prices; Outlook Stable
Fitch Upgrades CenterPoint’s IDR to ‘A-‘ and Unsecured Debt to ‘A’; Outlook Stable
NagaCorp Ltd. Upgraded To ‘B+’ On Stronger Credit Profile; Outlook Stable
Moody’s Ratings upgrades Alliant’s corporate family rating to B2, stable outlook
Whirlpool Corp. Ratings Lowered to ‘BB-‘ On Steep Profit Declines; Short-Term ‘B’ Rating Affirmed; Outlook Negative
Fitch Revises T-Mobile’s Outlook to Positive to Reflect Solid Performance; Affirms IDR at ‘BBB+’

Term of the Day: Clean-up Call

A clean-up call refers to a call provision, whereby once a stated percentage of a security is retired, the issuer is obliged to call the remainder of the tranche. While clean-up calls are generally more commonly observed in mortgage-backed securities (MBS), they may also be present as a feature in some bonds. This is different from a normal call option in a bond where the issuer has an option to redeem their bond fully during the specified call date./period.

Talking Heads

On Seeing AI, Retail Risks for High-Grade Debt Rally – Stephanie Doyle, JPMorgan

“If we’re seeing capex increase at the same rate that we saw 2025 to 2026, I think that’s probably a little bit of a red flag… Retail is the support function that we’re looking for right now and is what’s keeping a lid on spreads through all the volatility that we’re seeing… We’re about 5 to 7 basis points off the tights of the year — I think we could easily get back to that”

On Shrinking Balance Sheet Is ‘Wrong Objective’ – Fed Governor Michael Barr

“In any consideration of a change in the Federal Reserve’s approach to managing its balance sheet, we ought to go back to basics and ask what problem we are trying to solve… shrinking the Fed’s balance sheet is the wrong goal, and reducing the resilience of the banking system is the wrong means”

On High Oil Price Could Force Rate Hike – Yannis Stournaras, ECB GC member

“If it continues, then the ECB will have no other option but to raise interest rates… That falls between the second and third scenarios, rather than the first and second of the ECB”

Top Gainers and Losers- 15-May-26*