Bonds In Conversation : Thinking of Taper, Acting like QE
It’s been a short week for Singapore and a painful week for most EM especially India whose currency saw a new lifetime low against the USD, managing to outperform just Gold. The JPY strengthened as the market behaves like a spoilt brat, unhappy with status quo on the Abe arrows expecting more stimulus as if they have not learnt anything from stimulus tapering in the future.
Indeed the Credit Suisse USD 2.5 bio CoCo issue has rallied on the week, despite its “wipeout” clause should its Tier 1 ratio fall under 5%. The CS 6.5% 08/2023 issue up at 100.75/101.00 as we speak.
Yet all is not rosy for selective names such as Bakrie Telecom 05/2015, losing 5 points overnight to its 24 cts level now.
That is how I see the markets. Thinking of a taper and yet behaving like QE. Bonds are back in fashion and locally we are seeing a hunt for yield as stock markets show signs of fatigue, the S&P reluctant to rally in the face of decent economic data and non committal headlines this week being a sure sign.
In other news, Petra Foods managed to redeem their outstanding SGD 4.5% 2014 bond after the disposal of their core business. This looks like the last one.
Prices are higher on the week as SGD rates edged lower and the SGD strengthened against the USD into the long weekend.
I still cannot find a decent reason to be bullish so I will leave you with the prices (as of yesterday), some of which are missing (especially those arranged by a certain bank). I have my personal valuations for them and am looking to create another column for theoretical prices. My question is, would you want to be buying bonds whose prices are always in the grey zone ?