Bonds In Conversation : Brace For Impact

” March 21 (Bloomberg) — Investors stand to lose most of the $1.28 billion they put into Suntech Power Holdings Co. after the solar manufacturer said it wouldn’t resist a bankruptcy petition filed in China.

The company, based in Wuxi, outside Shanghai, had more than $2 billion in debt and defaulted on $541 million in bonds due on March 15, prompting eight Chinese banks to ask a local court to push Suntech’s main unit into insolvency.

The largest outside owners of Suntech’s American depositary receipts are Renaissance Technologies Corp., Invesco Ltd. and Shah Capital Management. None of the bondholders or shareholders were available for comment.”

Hopes of a government bailout has faded and the result is the first default out of China.

Wealthy Asian investors who’ve borrowed against their houses to buy bonds may find themselves among forced sellers if interest rates rise, spurring a price slump in vulnerable securities, according to Barclays Plc.” Source : Bloomberg

“Based on our discussions with various private banks, we think some private accounts could face margin calls if U.S. Treasuries sold off by 1.5 percent to 2 percent.”

Cyprus and now Spain.

Spain to Tax Banks 0.2% Maximum on Deposits, Montoro Says.

A slow economic recovery starts only with blood letting and so far, we have only been cauterising the wounds led by Fed buying and BOJ now driving 10Y JGBs to new lows in yields.

Our memories are short term as far as investments are concerned because greed powers us forward.

A question I would like to pose to readers this week is an important one.

Is it so bad to sit on 50% cash ?

On the Singapore Front

3 new issues.

ASL Marine 4.75% 04/2017 SGD 100 mio now going at 100.00/100.25. I do not expect it will be flying anytime soon.

CDL did a 10Y SGD issue at 3.48% 04/2023for 150 mio. Price is 99/100now. Not flying either.

And finally, BOC Aviation, the former SIA Leasing, did a 2Y at its lowest 2Y yield ever at 2% 03/2015. The price is 99.75/100.25.

On our radars, Swiber Perp is being actively watched and marketed. It is 93.50/95.50 now (12.85/11.86%). Cheung Kong Perp 5.125 09/2016 callable is trading up at 98.50/98.75 after hitting a low of 96.50 a month ago.

Unicredit sub 5.5% 07/2023 callable 2018, is 94.50/96.00. It is down 1.5 cts on the week since Cyprus last Friday. [Unicredit sub debt 5Y CDS has widened about 2% since last week)

Junk seems better for the uncertainty in Cyprus, with Olam seeing some rebound in their prices.

I am uncomfortable and uneasy with the situation where everyone is sitting in cruise control mode. Yet it is hard to argue with all the last tickets to paradise trades our brokers and bankers are sending out to us. Thus I will leave you with the usual weekly price updates (all unverified).

2013 New Issues


Olam Bond Prices


2012 Benchmark Prices

Weekly Corps

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