Bonds In Conversation : A Disconnect


Dollar Rocks With Stocks as Correlations Break Down: Currencies

 March 7 (Bloomberg) — For the first time in four years the
dollar is participating in a rally that has sent stocks to
record highs as traders in the $4-trillion-a-day foreign-
exchange market bet the world’s largest economy will only

Central banks’ side-effects outperform the intended ones

March 7 (Financial Times) — Financial markets eye new
peaks, yet output is everywhere decelerating or shrinking.

There is a theme of disconnect in the marketplace that is sowing confusion in thinking minds, save for the robotic traders.

China property bonds have outperformed their equity bouncing back after a one day sell off to give the market assurance on the new 5Y USD VANKE issue to come. Bring it on suckers !

Local SGD China property names held up PCRT 6.375 09/2015 (unchanged) at 102.00 and CENCHI 10.75% 04/2016 at 110.39 (-0.50). Swiber and Ezra perps both unchanged as well at 93.00 and 97.60.

Headlines I see this morning.
* 940 am China Vanke Markets 5 Year Bond in Dollars at About T+220 bps
* 950 am Vanke, Poly, Gemdale Lead Decline in Chinese Property Shares

Point to note is that the recent big Bharti issue went to mostly fund managers just as the Vanke is expected to as well.

Singapore had a Wingtai Holdings 10Y which was decently oversubscribed for its 100 mio issue size and 4.25% yield.

Incidentally, Reuters reported that the spokesperson for Monte De Paschi was found dead, which does not bode too well for Italian banks if anybody cares.

Singapore corporate issuance has trickled to an almost standstill these days with the Mapletree Greater China Trust REIT taking centrestage in market action last week and trading up 10 cts today. Who would have thought that Reits will trade up with higher interest rates ?

I expect the retail trend will to continue to favour equity or perpetual issuances now that straight bonds are starting to sour. Issuers are leaping on the opportunity to pay low returns and lock in equity options at high strikes as the stock markets power away.

So what do I make of the Tiger Air announcement to raise $238 million for expansion when they only had a 3rd quarter profit of $2 million (and a loss of $17.4 mio the year earlier) ?

Tiger Airways to raise $238 million for Asian expansion
The budget carrier, partly owned by Singapore Airlines, plans to raise the
money through a rights issue and a preferential offering of perpetual
convertible bonds.
By Aiko Hayashi | 6 March 2013

By hitting hard on the disconnect right now and …. just like the recent JPM China equity report started out by saying, “The optimistic macro view on China sits at odds with increasing lack of enthusiasm amongst our sector teams……”

And I leave you, disconnected….

Singapore Government Bonds


2012 Benchmark Corporate Bonds

Weekly Corps

2013’s Issues & Olam Prices

WINGTAI Mar-23 100.25
HDB Jan-18 99.75
GOODPACK Jan-23 99.75
MAYMK 1.35 01/28/14 Jan-14 100.08
HONGFOK Jan-18 100.73
GUTHRIE Jan-18 100.87
NUS Jan-18 100
UNICREDIT Jul-23 97.5
BIOSENSORS Jan-17 101.2
ICICI Jan-20 100
HPL Jan-18 100.4
OLAMSP 6 3/4 01/29/18 SGD 94.517 94.75
OLAMSP 6 10/25/22 SGD 90 92
OLAMSP 5 3/4 09/20/17 USD 93.75 93.8
OLAMSP 2 1/2 09/06/13 SGD 99.8 99.8
OLAMSP 5.8 07/17/19 SGD 93.85 94
OLAMSP 7 09/29/49 SGD 88 85
OLAMSP 6 08/10/18 SGD 96 92.5