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Anonymous ID: 486f89 Nov. 10, 2021, 11:07 a.m. No.107737   🗄️.is đź”—kun   >>7818 >>7836 >>7842

We Have A Tantrum: 30 Year Treasury Auction Is Catastrophic

 

If the ugliest auction so far in 2021 was the disastrous 7Y sale back in February, which sparked a mini market meltdown in both bonds and stocks, then the just concluded sale of $25BN in 30Y paper was almost just as terrible. It was, in a word, catastrophic and since it is at the very end of the curve, one could almost argue it was even worse than the infamous 7Y auction.

 

Stopping at a high yield of 1.940%, the auction was slightly below last month's 2.049%, but it was supposed to be far better, because while the When Issued traded at 1.888% the auction tailed by 5.2bps, which was the biggest tail on record for the 30Y tenor!

 

The bid to cover of 2.202 was far below last month's 2.360 and below the six auction-average of 2.292. But it was the internals that were ugliest of all, with Indirects taking down just 59.0%, a collapse from last month's 70.55% and far bleow the recent average of 64.3%. One has to go back to November 2019 to find a lower Indirect takedown. And with Directs also sliding to just 15.8%, the lowest since October 2020, Dealers were left holding on to 25.23%, the most since August 2020.

 

The record tail on a day that already saw the curve sell aggressively, sparked broad based revulsion, and moments after the results of the catastrophic 30Y auction were revealed, the curve spiked, with the long-end surging by 13.5bps, and the 10Y rising as high as 1.58% before recovering some losses.

 

And just in case the Fed is still unclear what is going on, this is the market - nearly a year before the Fed has to hike rates - tantruming and making it clear that it will not buy paper anywhere close to current levels if the Fed indeed abandons its QE commitment and subsequently hikes rates. Brace for far, far uglier auctions in the coming months from a market that is now fully habituated to getting everything it wants from the Fed. And yes, it will get another QE, it just has to wait a bit until stocks drops 10% or so before Powell throws in the towel.

https://www.zerohedge.com/markets/we-have-tantrum-30-year-treasury-auction-catastrophic

https://www.marketwatch.com/investing/bond/tmubmusd30y

Anonymous ID: 486f89 Nov. 10, 2021, 1:51 p.m. No.107754   🗄️.is đź”—kun   >>7818 >>7836 >>7842

Evergrande Set to Avoid Default After Paying Overdue Interest on 2 bonds

 

China Evergrande Group looks set to avert another default in its biggest test since the property developer’s debt crisis began.

 

Customers of international clearing firm Clearstream received overdue interest payments on three U.S. dollar bonds issued by Evergrande, a spokesperson for Clearstream said. Two investors that hold two of the bonds confirmed that they received the payments, asking not to be identified because they weren’t authorized to speak publicly. Investors had been waiting to see if the embattled developer would make the coupon payments totaling $148.1 million before the end of 30-day grace periods on Wednesday. Evergrande missed the initial interest deadlines last month, Bloomberg-compiled data show.

 

The affected bonds include a 9.5% note due 2022, 10% bonds due 2023, and its 10.5% note due 2024. The property giant pulled back from the brink of default in October by paying other coupons before the end of its grace period. But the crisis at Asia’s largest junk bond issuer is hardly over, as it grapples with more than $300 billion in liabilities. A string of other developers have also fallen into distress amid a crackdown on speculation and leverage following years of debt-fueled expansion. The contagion has even spread to other areas of the credit market.

 

On Monday, two holders of other dollar notes sold by a unit of China Evergrande said they hadn’t received payment for coupons that were officially due Saturday. Both of those coupons also have a 30-day grace period before any missed payment would be considered a default.

 

A representative for Evergrande didn’t immediately respond to a request for comment sent outside of normal business hours.

 

Authorities have sought to limit the fallout from the wider property market distress, with the central bank injecting liquidity into the financial system. Chinese developers’ bonds and stocks rallied Wednesday after the Securities Times said authorities are likely to loosen controls for the nation’s real estate companies to issue local-currency notes, part of efforts to prevent a further deterioration in their financing.

 

But concerns persist. A string of defaults and downgrades in the property industry in recent weeks pushed yields on junk dollar bonds from Chinese issuers to the highest in at least a decade over 24%.

https://www.bloomberg.com/news/articles/2021-11-10/evergrande-said-to-pay-delayed-interest-on-at-least-two-bonds

 

 

>>107642 pbCHINA EVERGRANDE Group / Evergrande officially defaulted - DMSA is preparing bankruptcy proceedings against Evergrande Group