Bonds In Conversation : Missing the Forest For the Trees

How did we miss the forest for the trees ? The best performing asset in the world this week would be Bitcoins which are up 50%.


The talk is that China has just got into the game of Bitcoins, being the second largest Bitcoin market in the world currently while Thailand is doing the right thing by banning them which got me wondering if they should ban Thais from buying London property too.

Plenty of ratings action with Holland, Ukraine and Tunisia downgraded by the S&P, Cyprus upgraded.

It is all about currencies too this week and the path of less resistance is still a continuation of trends. We are seeing new records and decade long records broken for currency pairs which markets are brushing aside as currency rotations with no further repercussions.

The outlook for 2014 has pretty much condemned EM to a slow growth while the developed markets take the driver’s seat. What is unpublicised are macro themes that are glaring at us which most official bank reports are choosing to ignore or selectively disseminate because it is almost a crime to be negative about the economy or about some governments as Vietnam just announced fines for citizens who criticise the government on social media (lenient as compared to China).

We are headed for a period of protracted slow growth and low productivity.

If the expected future return of equities is about 4 percent a year over the next decade as Ray Dalio of Bridgewater says, bond yields can just crawl along in peace and undisturbed even as the yield curve steepens.

In bond space, a new trend is starting to emerge. Good quality names are seeing duration extensions while the BBB and lessor credits are running into cautious bids resulting in duration shortening. High yields remain slightly challenged in a discerning environment.

Singapore saw yet another Oxley bond, winning the company the most frequent bond issuer of the year award, with its reopenings included. And a high yielder soon to be private company, Miclyn issuing a 3Y at 8.5% for SGD 150 million and trading at 100.20/100.35 today.

Perps are rallying after DBS successfully conducts its tender for its outstanding DBS 4.7% callable 10/2020 SGD 1.7 bio issue. SGD 805 mio new DBS 4.7% Basel III compliant bonds were issued and we are hearing the grey market at 101/101.50, reaping an instant windfall for successful bidders.

The Sembcorp 5% perpetual also ran up nicely in the past fortnight, which is worthy of mention, now trading above 101 after a lackadaisical launch back in Aug.

I would not call this  a bull run as it is probably pent up demand from the rest of the 900 odd million who did not get their allocation and running on a one track mind to hitch themselves back on the perp bandwagon and who are probably missing out on the forest and bitcoins in the process.

Leaving you with the prices, all unverified.

USD Bonds listed in Singapore and Hong Kong


2013 SGD Issues


2012 SGD Bonds



Zoo River Safari

The River Safari is a costly experience when you bring 2 kids (son and niece) along and panda toys and photos are heavily marked up. And having seen pretty nice river exhibits in other zoos at lower ticket prices, I think I should have just brought them to stay over at Bintan for the night – would have worked out almost the same.

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