Bonds In Conversation : Nothing Like A Crisis To Get Things Done
There is nothing like a crisis to get things done. Today India announces internationalisation of their currency, a move they had resisted for eons until the recent rout in their markets.
As such, IFC (World Bank) will sell 1 billion USD worth of INR in offshore bonds.
Corporate bonds are doing well globally as nervous money switches out of stock markets and put themselves to work in credit. Not a mad grab situation but still healthy demand that has been lying waiting. Pimco is loading up and even Warren Buffet surely wouldn’t mind a bond or two given that he has few stocks left to buy.
He says, “They’ve moved a long way. They were very cheap 5 years ago.. ridiculously cheap.. and that’s been corrected. They’re probably more fairly priced now. We don’t find bargains around, but we don’t think things are way overvalued either. We’re having a hard time finding things to buy.” 24 Sep Interview on CNBC
So we are left with bonds and a sure bet that there will be more bonds to come once America raises that debt ceiling (debt = bonds) as we come to a definite conclusion that a real default out of the US is quite out of the question with a technical default the worst case scenario.
As such, bonds would still be the safest asset class and the Default word made redundant in our vocabularies.
Locally, things are starting to look interesting. Despite the Blumont and penny stock tumble, none of the bonds issued by the small caps were majorly affected which is good news indeed.
I came across an interesting article in Asiaone about Freight Links extending a 6 year loan to City Harvest church at 8% or >12% including the upfront fees, which is mighty decent of them.
Freightlinks 4.6% 05/2017 bond is indicating a mid yield of 4.42%, although I do not expect it to be highly liquid.
We also had a new SGD 50 mio issue out of Marco Polo Marine at 5.75% for 3 years which is also a huge feat considering that they are in the small cap stock category that is under siege these days. I would say all credit goes to the bank for flogging it off so well although I must say that the private banking rebate offered is the highest we have seen so far.
As a joke, I was just thinking out loud that they could also lend to City Harvest and make some decent profits from it (in case they do not need the funds). Would this be classified as Shadow Banking ?? Just an frivolous thought.
Leaving you with the prices which are all unverified.