Bond Market Phenomena – Slovenia, Guoco, Wow !

Market phenomena everyday ! Apple issues 17 bio, reportedly the largest bond issuance in history, on the day S&P breaks historic high. CNOOC raises the biggest issue in Asia since 2003 for USD 4 bio yesterday. And today we have nice little miracles happening in the market.

Slovenia slovenia

I thought nothing of the cut of junk by Moody’s on 30 April although it was right in the midst of a bond issue, which caused some chaos.

So, they held back and remarketed it and voila ! order books swelled even larger to 16 bio ! (pre downgrade was 12.5 bio !)

The rating agencies ARE SPLIT ! Moody’s downgraded them to Ba1 but S&P have them at A-. This must be one of the WIDEST RATING DISPARITY  I have seen.

“April 30 (Bloomberg) — Moody’s sees sovereign holding
enough liquidity to meet funding needs through end of the yr,
excluding potential capital infusion to the banking sector.
*  Cut to Ba1 from Baa2
*  Cites state of Slovenia banking sector, marked deterioration of Slovenia’s gov
balance sheet, uncertain funding prospects that heighten the probability that
external assistance will be needed
*   Sees economy contracting by further 1.9% in 2013
*   Sees weak recovery in 2014, growth reaching 0.2%
*   Sees bank recapitalization costs in order of 8%-11% of GDP
*   Moody’s changes Slovenia govt financial strength rating to medium from high”
Source : Bloomberg

“S&P May 2 (Bloomberg) — Says expects bonds will finance the
recapitalization of troubled state-owned banks as well as
prefund some of the government’s borrowing needs for 2014 and
2015, according to statement.” Source : Bloomberg

So nice happy ending. They issued at 6% (prev 5.85%, price 98.88), keeping the coupon at 5.85% and the bond rallied to 103 for the 2023 issue !!


One day after a 3Q12 loss, Guocoland turns around and raises SGD 125 mio in the tightest spread they have paid for 7Y money, which makes their 5Y bond coupon (if you had bought it at launch) look pretty good.

Of course 65% of the issue went to private banks for an order book in excess of SGD 1.25 bio.

My Thoughts ?

It is too early to feel the mood of Xmas giving. Yet the world is in dire need of wealth re-distribution. So much for that.

Good luck with the Non Farms tonight !