Bonds In Conversation : Life Is Good

We have come to the end of the month and the 3rd quarter of 2013. A moment’s reflection is that life is good.

We have survived a mini crisis of sorts. The Fed came to the rescue and now things on their way to a rosy ending for us very simply because the markets have them on a leash now.

Pimco’s El Erian has the concept neatly mapped out.

“markets have …been conditioned to expect that – when push comes to shove – lawmakers manage to find a way to avoid lasting damage.”

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The Morningstar EM corp and HY (in yellow) bond index is back to its July levels. We are coming out of the woods.

Indonesia managed to sell 12 trillion IDR worth of bonds in their latest local auction and Malaysia is looking to launch 2.5 billion MYR for their longest maturity debt tenor of 30 years tomorrow that is expected to come at 4.35-4.75%.

Crisis control is underway with Indonesia signing bilateral swaps with 3 countries and reforms are across the region.

The Singapore bond market came back to life with 3 news issues and a bond re tap today of United Envirotech 7.25% 3Y today.A 1Y Guoco, 3Y Lippo Malls and a new name in PERISAI PETROLEUM TEKNOLOGI BHD in the 3Y which was, sadly, a flop with only SGD 23 million in demand mainly because it was not marketed in the street and many a clients missed hearing of its launch. And it is regrettable that most retail only got to see the overpriced Lippo Malls issue which I am hearing is awarded leverage to make its low yield more palatable.

Market appetite still anemic it appears despite EZRA 5% 09/2015 recovering towards its issue price, the Olam perps are still yielding over 15% to call (which is perhaps a mistake to expect the call to be exercised now given  its current yield).

Still, a happy ending for this quarter because we know now that the governments will do anything to keep things going as they are.

Leaving you with the indicative prices.