The Bank of Russia unexpectedly maintained its key interest rate at a record-high 21% , defying analysts’ expectations of another significant hike as inflation remains stubbornly elevated. The decision marks a shift toward a more measured approach in balancing economic growth and price stability. Key Details Inflation Concerns: Annual inflation climbed to 8.9% in November, well above the central bank’s 4% target , with inflation expectations reaching 13.9% in December. Policy Rationale: The central bank cited the significant tightening of monetary conditions after October’s 200-basis point hike as sufficient to resume disinflationary processes. Governor Elvira Nabiullina emphasized avoiding both economic overheating and severe slowdowns. Economic Overheating: Elevated government spending on the war in Ukraine and social programs, coupled with labor shortages and rising wages, have fueled strong domestic demand, exacerbating price pressures...
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Corporate borrowers are flooding the debt markets to raise cash before central bank meetings this week.
On Monday, ten companies issued new bond deals in the high-grade primary market, while 14 new leveraged loan sales and seven high-yield bond offerings began, according to Bloomberg data.
Royal Caribbean is issuing $1.5 billion in junk bonds to refinance existing debt, and Seaworld has launched a $1.5 billion loan refinancing. Netflix is holding a call with fixed-income investors about a potential blue-chip bond offering.
Borrowers are capitalizing on favorable funding conditions ahead of the Federal Reserve's rate decision on Wednesday, with the Bank of Japan and Bank of England also meeting this week. US high-yield bond market yields are at their lowest this year, and high-grade bond market borrowing costs have decreased this month.
Wall Street banks are arranging new offerings for Enova International, Permian Resources, and Amentum, and preparing high-yield bond deals for Walgreens Boots Alliance Inc and Newell Brands.
Citigroup Inc, JPMorgan Chase & Co, and Sumitomo Mitsui are leading Royal Caribbean's 8.5-year offering, aimed at refinancing 2029 notes with interest rates of 9.25% and 8.25%.
Mercedes-Benz Finance North America is marketing a five-part investment-grade offering. Syndicate desks expect around $25 billion in new issuance this week, with most occurring before the policy statements. July's issuance volume has reached $96.6 billion, the busiest since 2017.
Key Takeaways:
- Corporate borrowers are issuing new bonds and loans ahead of central bank meetings.
- Royal Caribbean and Seaworld are refinancing debt with new offerings.
- Netflix is considering its first blue-chip bond deal since its upgrade.
- Borrowers benefit from favorable funding conditions in current credit markets.
- Wall Street banks are prepping additional high-yield bond deals.
- Significant new issuance expected before policy announcements from the Federal Reserve, Bank of Japan, and Bank of England.
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