Bonds In Conversation : Bazooka Ben Is Back

I honestly do not know what to make of the statement. He said the plan is  “not preset” which is subject to interpretations but the market choose to believe in the continuation of monetisation and the liquidity party to go on.

July 18 (Bloomberg) — The Federal Reserve’s mixed messages
on monetary policy are stoking volatility in the $4 trillion-a-
day currency market, raising the odds that companies will have a
harder time setting up exchange-rate hedges designed to protect
overseas earnings.

It is highly confusing when we are forced to buy not because the investment made sense but because there the price will be inflated by too much money chasing too little goods and living on borrowed time.

Bond issuance stirred to life this week with a new UOB SGD perpetual, the first with the Basel 3 loss absorption clause by a local bank which is rated 1 notch below the UOB 5.05% perpetual that will be called back in Sep. Despite Moodys cutting Singapore banks outlook to negative, the bond saw good demand with order books about SGD 2 bio for a SGD 850 mio issue.

Junk sells with Oxley re-opening their 5YNC3 issue just done earlier this month, in a mad rush to max out their borrowing limits under the MTN programme which is encouraging more such issuers to come out.

Bloomberg : Tat Hong Hires DBS, OCBC to Market S$500m Medium Term Note Sale

Spurred by the small come back in EM markets and SGD interest rates crashing lower, SGD bonds saw the best credits rallying back furiously led by the HDBs. The rest had a mixed perfomance, prices marginally lower mostly in a catch up with credit deterioration that has eluded the Singapore market so far.

An interesting quote by an OCBC analyst which I came across.

Singapore dollar bonds were being issued at very tight levels prior to the market recent closure,” Jerry Gwee, a credit strategist at OCBC, said in an interview yesterday. “As the market reprices with expectations of the Federal Reserve’s tapering plan, primary issues may come again at more attractive yield levels for funds and private banks.” (Bloomberg : Shrinking Singapore Bond Sales Seen Creating Value, OCBC Says)

It only says to me that all issues so far have been EXPENSIVE. And we have 2 reits coming out to compete for cash.

Leaving you with the prices (all unverified) and a headline from UBS research.

“We recommend that investors use current tranquility in the market to review exposures and trim positions if overly exposed. Remaining holdings should lean toward state-owned developers and BB credits.”




And a photo courtesy of my Rich Old Friend who is currently in Nepal – their national dish called momo.

national dish of nepal