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International Bond Market Conference 2009 Strategies for Prospering Primary and Secondary Bond Markets 債券發行市場與交易市場相輔相成之發展策略. November 2009. Impact to Credit Markets. Outline. What Is the Current Status of Crisis? What Is the Global Bond Market Status? What Is the Taiwan Bond Market Status? - PowerPoint PPT Presentation
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A Standard & Poor’s Ratings Partner
保密且專屬
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International Bond Market Conference 2009
Strategies for Prospering Primary and Secondary Bond Markets
債券發行市場與交易市場相輔相成之發展策略
November 2009
2.
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Impact to Credit Markets
3.
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I. What Is the Current Status of Crisis?
II. What Is the Global Bond Market Status?
III. What Is the Taiwan Bond Market Status?
IV. Discussion and Q/A
Outline
4.
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What Is the Current Status of Crisis?
5.
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Writedowns & Credit Losses vs. Capital Raised (as of August 25 2009)
Region Loss Capital Raised
Worldwide 1,603 1,306
Americas 1,075 752
Europe 487 453
Asia 41 102
Billion USD
Source: Bloomberg
6.
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Major US Bank CDS
Source: Bloomberg
7.
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Annual Corporate Defaults
8.
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Downgrade Ratios By Region
9.
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What Is the Global Bond Market Status?
10.
保密且專屬
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Global Bond Market Status
• The corporate bond market has seen a strong rebound this year, with both investment-grade and speculative-grade spreads falling to their lowest levels since July 2008.
– Corporate bond spreads have declined substantially from their peaks.
– Corporate bond issuance has been robust in 2009.
• Most of the fixed-rate bonds that speculative-grade companies have issued in 2009 are four to eight years in length and have a yield to maturity at issue in the 10%-14% range.
• Not surprisingly, the average yield tends to be inversely correlated with ratings, meaning that lower-rated issues tend to have higher yields.
• Looking forward, refinancing risk will remain an issue, with speculative grade in particular witnessing a ramp-up in the maturity schedule over the next few years.
• The recent uptick in bond issues to refinance loans is partly the result of two underlying trends:
– First, the high-yield bond market has been more welcoming to new issuers than the leveraged loan market. In the first nine months of the year, 86% of speculative-grade debt has been in bonds versus 45% during the same period in 2008, according to Standard & Poor's Leveraged Commentary & Data.
– Second, some issuers likely have chosen to issue bonds not because they couldn't place loans, but rather because they want less restrictive covenants and, in some cases, longer maturities.
11.
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Corporate Bond Spreads
12.
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Corporate Bond Issuance Amount (Data as of Sept. 28 2009)
0
50
100
150
200
250
300
350
Issu
ance
Am
ount
(B
ill $
)
Period Q12008
Q22008
Q32008
Q42008
Q12009
Q22009
Q32009
Period
Total
Investment Grade
Speculative Grade
Not Rated
0
20
40
60
80
100
120
140
160
180
200
Issu
ance
Am
ount
(B
ill $
)
Period Q12008
Q22008
Q32008
Q42008
Q12009
Q22009
Q32009
Period
Financial Companies
Investment Grade
Speculative Grade
Not Rated
0
20
40
60
80
100
120
140
160
180
Issu
ance
Am
ount
(B
ill $
)
Period Q12008
Q22008
Q32008
Q42008
Q12009
Q22009
Q32009
Period
Nonfinancial Companies
Investment Grade
Speculative Grade
Not Rated
Source: Thomson Reuters and Standard & Poor’s Global Fixed Income Research
13.
保密且專屬
本簡報資訊內容之轉載或散佈，必須取得中華信用評等公司書面同意。
Global Bond Market Status
• The corporate bond market has seen a strong rebound this year, with both investment-grade and speculative-grade spreads falling to their lowest levels since July 2008.
– Corporate bond spreads have declined substantially from their peaks.
– Corporate bond issuance has been robust in 2009.
• Most of the fixed-rate bonds that speculative-grade companies have issued in 2009 are four to eight years in length and have a yield to maturity at issue in the 10%-14% range.
• Not surprisingly, the average yield tends to be inversely correlated with ratings, meaning that lower-rated issues tend to have higher yields.
• Looking forward, refinancing risk will remain an issue, with speculative grade in particular witnessing a ramp-up in the maturity schedule over the next few years.
• The recent uptick in bond issues to refinance loans is partly the result of two underlying trends:
– First, the high-yield bond market has been more welcoming to new issuers than the leveraged loan market. In the first nine months of the year, 86% of speculative-grade debt has been in bonds versus 45% during the same period in 2008, according to Standard & Poor's Leveraged Commentary & Data.
– Second, some issuers likely have chosen to issue bonds not because they couldn't place loans, but rather because they want less restrictive covenants and, in some cases, longer maturities.
14.
保密且專屬
本簡報資訊內容之轉載或散佈，必須取得中華信用評等公司書面同意。
Speculative-Grade Fixed-Rate Bond Yields and Maturities
15.
保密且專屬
本簡報資訊內容之轉載或散佈，必須取得中華信用評等公司書面同意。
Global Bond Market Status
• The corporate bond market has seen a strong rebound this year, with both investment-grade and speculative-grade spreads falling to their lowest levels since July 2008.
– Corporate bond spreads have declined substantially from their peaks.
– Corporate bond issuance has been robust in 2009.
• Most of the fixed-rate bonds that speculative-grade companies have issued in 2009 are four to eight years in length and have a yield to maturity at issue in the 10%-14% range.
• Not surprisingly, the average yield tends to be inversely correlated with ratings, meaning that lower-rated issues tend to have higher yields.
• Looking forward, refinancing risk will remain an issue, with speculative grade in particular witnessing a ramp-up in the maturity schedule over the next few years.
• The recent uptick in bond issues to refinance loans is partly the result of two underlying trends:
– First, the high-yield bond market has been more welcoming to new issuers than the leveraged loan market. In the first nine months of the year, 86% of speculative-grade debt has been in bonds versus 45% during the same period in 2008, according to Standard & Poor's Leveraged Commentary & Data.
– Second, some issuers likely have chosen to issue bonds not because they couldn't place loans, but rather because they want less restrictive covenants and, in some cases, longer maturities.
16.
保密且專屬
本簡報資訊內容之轉載或散佈，必須取得中華信用評等公司書面同意。
New Nonfinancial Corporate Bond Issuance (Maturities >= 3 years)
17.
保密且專屬
本簡報資訊內容之轉載或散佈，必須取得中華信用評等公司書面同意。
Global Bond Market Status
• The corporate bond market has seen a strong rebound this year, with both investment-grade and speculative-grade spreads falling to their lowest levels since July 2008.
– Corporate bond spreads have declined substantially from their peaks.
– Corporate bond issuance has been robust in 2009.
• Most of the fixed-rate bonds that speculative-grade companies have issued in 2009 are four to eight years in length and have a yield to maturity at issue in the 10%-14% range.
• Not surprisingly, the average yield tends to be inversely correlated with ratings, meaning that lower-rated issues tend to have higher yields.
• Looking forward, refinancing risk will remain an issue, with speculative grade in particular witnessing a ramp-up in the maturity schedule over the next few years.
• The recent uptick in bond issues to refinance loans is partly the result of two underlying trends:
– First, the high-yield bond market has been more welcoming to new issuers than the leveraged loan market. In the first nine months of the year, 86% of speculative-grade debt has been in bonds versus 45% during the same period in 2008, according to Standard & Poor's Leveraged Commentary & Data.
– Second, some issuers likely have chosen to issue bonds not because they couldn't place loans, but rather because they want less restrictive covenants and, in some cases, longer maturities.
18.
保密且專屬
本簡報資訊內容之轉載或散佈，必須取得中華信用評等公司書面同意。
Maturity Schedule
19.
保密且專屬
本簡報資訊內容之轉載或散佈，必須取得中華信用評等公司書面同意。
Global Bond Market Status
• The corporate bond market has seen a strong rebound this year, with both investment-grade and speculative-grade spreads falling to their lowest levels since July 2008.
– Corporate bond spreads have declined substantially from their peaks.
– Corporate bond issuance has been robust in 2009.
• Most of the fixed-rate bonds that speculative-grade companies have issued in 2009 are four to eight years in length and have a yield to maturity at issue in the 10%-14% range.
• Not surprisingly, the average yield tends to be inversely correlated with ratings, meaning that lower-rated issues tend to have higher yields.
• Looking forward, refinancing risk will remain an issue, with speculative grade in particular witnessing a ramp-up in the maturity schedule over the next few years.
• The recent uptick in bond issues to refinance loans is partly the result of two underlying trends:
– First, the high-yield bond market has been more welcoming to new issuers than the leveraged loan market. In the first nine months of the year, 86% of speculative-grade debt has been in bonds versus 45% during the same period in 2008, according to Standard & Poor's Leveraged Commentary & Data.
– Second, some issuers likely have chosen to issue bonds not because they couldn't place loans, but rather because they want less restrictive covenants and, in some cases, longer maturities.
20.
保密且專屬
本簡報資訊內容之轉載或散佈，必須取得中華信用評等公司書面同意。
What Is the Taiwan Bond Market Status?
21.
保密且專屬
本簡報資訊內容之轉載或散佈，必須取得中華信用評等公司書面同意。
Taiwan Bond Market
Taiwan's straight bond (corporate and financial debenture issues) and convertible / exchangeable bond markets could see a resurgence in activity over the next two quarters.
a prevailing low interest rate environment and trends of raising up the interest rate,
modest signs of economic recovery in Taiwan,
the recent rebound of the domestic stock market, and
local banks' increased need to strengthen their regulatory capital ratios.
Though higher ( twAA-) rating hurdle for domestic bond issuance still exists, some issuers could sell domestic bond which is lower than "twAA-" recently, e.g. Asia Cement Corp. (tw A+)(1.95% + 5 billion NTD + 5 years on Sept. 22 2009) issued bonds in domestic market.
Credit spreads (five-year bond yields over government bonds yields with the same tenor) slightly narrowed in the second quarter of 2009, as overall issuance rates gradually adapted to a succession of interest rate cuts and a decline in investor fears.
A growing tendency for investors to factor credit risk awareness into their required yield was observed. Market participants continue to favor more creditworthy institutions, with 'twBBB' rated debentures and bonds traded at increasing spreads than higher-rated issues--'twA', 'twAA', and 'twAAA'
Structured products like securitization could be recovered back to market after the financial crisis.
22.
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Taiwan Bond Market Outstanding & Issuance Amount
Source:公司債：中央銀行網站 金融債券： 中央銀行網站 可轉債 : 證券櫃檯買賣中心 證券化證券：銀行局網站
0
20
40
60
80
100
120
Billio
n N
TD
10/2008 12/2008 2/2009 4/2009 6/2009 8/2009
Year
Corp. Bond and Financial Debentures Issuance Amount
Corporate bonds
Bank debentures
0
50
100
150
200
Billio
n NT
D
2003 2004 2005 2006 2007 2008 YTD2009
Year
Issuance Amount for Securitization Market
23.
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Taiwan New Issuance Amount Rated by TRC (up to Oct 2009)
Total outstanding amount of issuance bonds rated by TRC: 1,370 billion NTD + 300 ( 高鐵 ) million USD
Amount applied to TRC and issued in 2009:applied amount (2009 only): 199.8 billion NTDissued in 2009 (applied in 2009 and 2008): 159.2 billion NTD
Corporate Bond : 63.5 billion NTDBank Debentures : 95.7 billion NTD
issued in 2009 (applied in 2009 only): 117.1 billion NTDThe rest of applied amount to be issued in 2009: 82.7 billion NTD
24.
保密且專屬
本簡報資訊內容之轉載或散佈，必須取得中華信用評等公司書面同意。
Taiwan Bond Market
Taiwan's straight bond (corporate and financial debenture issues) and convertible / exchangeable bond markets could see a resurgence in activity over the next two quarters.
a prevailing low interest rate environment and trends of raising up the interest rate,
modest signs of economic recovery in Taiwan,
the recent rebound of the domestic stock market, and
local banks' increased need to strengthen their regulatory capital ratios.
Though higher ( twAA-) rating hurdle for domestic bond issuance still exists, some issuers could sell domestic bond which is lower than "twAA-" recently, e.g. Asia Cement Corp. (tw A+)(1.95% + 5 billion NTD + 5 years on Sept. 22 2009) issued bonds in domestic market.
Credit spreads (five-year bond yields over government bonds yields with the same tenor) slightly narrowed in the second quarter of 2009, as overall issuance rates gradually adapted to a succession of interest rate cuts and a decline in investor fears.
A growing tendency for investors to factor credit risk awareness into their required yield was observed. Market participants continue to favor more creditworthy institutions, with 'twBBB' rated debentures and bonds traded at increasing spreads than higher-rated issues--'twA', 'twAA', and 'twAAA'
Structured products like securitization could be recovered back to market after the financial crisis.
25.
保密且專屬
本簡報資訊內容之轉載或散佈，必須取得中華信用評等公司書面同意。
Taiwan Bond Market
Taiwan's straight bond (corporate and financial debenture issues) and convertible / exchangeable bond markets could see a resurgence in activity over the next two quarters.
a prevailing low interest rate environment and trends of raising up the interest rate,
modest signs of economic recovery in Taiwan,
the recent rebound of the domestic stock market, and
local banks' increased need to strengthen their regulatory capital ratios.
Though higher ( twAA-) rating hurdle for domestic bond issuance still exists, some issuers could sell domestic bond which is lower than "twAA-" recently, e.g. Asia Cement Corp. (tw A+)(1.95% + 5 billion NTD + 5 years on Sept. 22 2009) issued bonds in domestic market.
Credit spreads (five-year bond yields over government bonds yields with the same tenor) slightly narrowed in the second quarter of 2009, as overall issuance rates gradually adapted to a succession of interest rate cuts and a decline in investor fears.
A growing tendency for investors to factor credit risk awareness into their required yield was observed. Market participants continue to favor more creditworthy institutions, with 'twBBB' rated debentures and bonds traded at increasing spreads than higher-rated issues--'twA', 'twAA', and 'twAAA‘.
Structured products like securitization could be recovered back to market after the financial crisis.
26.
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本簡報資訊內容之轉載或散佈，必須取得中華信用評等公司書面同意。
Credit Spreads of Taiwan Bond Market
27.
保密且專屬
本簡報資訊內容之轉載或散佈，必須取得中華信用評等公司書面同意。
Taiwan Bond Market
Taiwan's straight bond (corporate and financial debenture issues) and convertible / exchangeable bond markets could see a resurgence in activity over the next two quarters.
a prevailing low interest rate environment and trends of raising up the interest rate,
modest signs of economic recovery in Taiwan,
the recent rebound of the domestic stock market, and
local banks' increased need to strengthen their regulatory capital ratios.
Though higher ( twAA-) rating hurdle for domestic bond issuance still exists, some issuers could sell domestic bond which is lower than "twAA-" recently, e.g. Asia Cement Corp. (tw A+)(1.95% + 5 billion NTD + 5 years on Sept. 22 2009) issued bonds in domestic market.
Credit spreads (five-year bond yields over government bonds yields with the same tenor) slightly narrowed in the second quarter of 2009, as overall issuance rates gradually adapted to a succession of interest rate cuts and a decline in investor fears.
A growing tendency for investors to factor credit risk awareness into their required yield was observed. Market participants continue to favor more creditworthy institutions, with 'twBBB' rated debentures and bonds traded at increasing spreads than higher-rated issues--'twA', 'twAA', and 'twAAA‘.
Structured products like securitization could be recovered back to market after the financial crisis.
28.
保密且專屬
本簡報資訊內容之轉載或散佈，必須取得中華信用評等公司書面同意。
Discussion and Q/A
