Bonds In Conversation : Freedom Ship
I have been capitivated by this Freedom Ship which, alas, I will never get to board.
For those who have watched 2012, the movie staring what’s his name, the Serendipity chap, we note the kindness in allowing the hordes without tickets to board the doomsday arks at the last minute before the storm hit. Yet the question that plagues us long after we leave the theatres is that majority of the world were in ignorance of the existence of the arks that would save us from extinction and only very few were lucky enough to realise and make that perilous trip to Tibet to fight for their chance on board without a ticket.
It is eerie that we have come to this for the world and with economies all running on government life support, we cannot but feel trapped under the weight of policy actions in our lives like those investors in Bitcoins who were greedy for profits, only to have central banks coming out to ban the product like China did yesterday. http://www.cnbc.com/id/101249450
One thing for sure in the past week is that US treasuries are simply not finding much demand except with the NY Fed who is holding more than 50% of the longer tenors. Even more uncertain for US bonds is a proposal to introduce withholding taxes on some offshore investors in US bonds, closing out a present loophole on tax. http://www.bloomberg.com/news/2013-12-05/u-s-corporate-debt-seen-hurt-by-baucus-repeal-of-tax-law.html
My opinion is that there is really almost no reason to be holding on to treasury notes at the moment. https://tradehaven.net/market/the-risk-of-higher-10y-ust-yields/
Detroit City is now officially bankrupt – the largest one for America yet. http://in.reuters.com/article/2013/12/03/usa-detroit-bankruptcy-idINDEE9B204020131203
“In a financial plan he had laid out prior to the bankruptcy filing, Orr had proposed offering unsecured creditors shares in a $2 billion note in exchange for $11 billion in unsecured debt.”
That is a under 20% recovery rate.
In Singapore, it is interesting to note that MAS gave local corporate bonds special mention in their 2013 Financial Stability Review which I mentioned about 2 days ago. https://tradehaven.net/market/down-playing-the-sgd-for-the-right-reasons-sgd-corporate-bonds-and-usdsgd/
The comment was that some of the new issues warranted “closer monitoring” of risks. Perhaps with issuers borrowing more than prudently because of cheap funding and retail demand, the possibility of re-financing difficulties in the future is higher.
Other than that, all eyes are on the Non Farm Payrolls tonight and the FOMC on the 19th. We are enroute to a taper and until then, there is little else we can do but wait for overlords of the market to make their move and bid Mandela goodbye.
Prices, as usual, all unverified.
USD bonds listed in SGX and HK.
SGD Bonds Issued in 2013
SGD Bonds Issued in 2012