Bonds In Conversation : Are You Ready For The Truth ?

Where do FOMC members go when they retire ?

A week of ups and downs and ups as the market digests bad employment numbers, good retail sales and a tame CPI. An ideal for the bond market and treasuries are at a one month low. European debt and real estate are in demand as Spanish 10Y yields fell to Sep 2006 (pre crisis) levels and the FT reports that Dublin property has become the hottest on the continent (

Argentina just announced a debt swap because they have no money to pay, so they are rolling it forward and also making their pension fund raise USD. Citi and Goldman trading numbers have crapped out but BofA nd JPM rode high. Citi and Goldman do over rely on trading because it is the most balance sheet efficient albeit the high risk and volatile nature of the business. Well, bonuses have been announced and we will watch for Ferrari sales even though most of them have bought last year.

It’s been a struggle for corporate bonds in general, even as we are told that investors are over the moon with the new issues such as the Fantasia (B2/B+) 5YNC3 had 2.6 bio in orders for a 10.625% USD 300 mio issue, 71% of which were fund managers and Yuzhou (B2/B) is coming out with a 5YNC3 today at 8.875% indic. That is more like it, I say. Proper yields ! Not I-am-only-paying-you-1.7%-because-I-am-a-licensed-moneylender, sort of yield. And who says we are worried about China.

*LGFV – Local Government Funding Vehicle.

Prices are pretty stuck in a range and Blackrock’s (whose profits outperformed) CEO has an astute assessment for us that the great rotation will not be from bonds to stocks but shall happen within the bond market.
“Fink said in a “Squawk Box” interview that he’s seeing a rotation into high-yield, short duration bonds, as investors try to avoid interest rate risk.”

This is even as investors pulled $3.5 bio from fixed income ETFs, plunged $24.1 bio into stock ETFs and actively managed bond funds saw deposits of $4.3 bio.

Other good news for bond investors. Banks continue to push the idea of global deflation risks (I wonder how when minimum wage is going up and you can’t get a cook in Singapore for SGD 4,000 a month

But if they (the banks and the numbers) will and can make it happen afterall, it is just an economic number and at the HSBC conference in HK earlier this week, there are expectations for the 10Y US treasury yield to hit 2% by the end of 2014.

In Singapore this week, we have a surprise rebuttal from the MAS, refuting a Forbes article that said the city is headed for an “Iceland -style meltdown” written by someone who does not live in Singapore, of course. I find it cute and will not comment on it. Here is his retort to their rebuttal.
(Psssst, is Forbes banned in Singapore, btw ?)

Some nice issues to start the year starting with Croesus Reit 4.6% 01/2017 for SGD 100 mio and Hyflux doing a perpetual at 5.75%, callable 3Y which was upsized due to strong demand. Stanchart also launched a SGD 700 mio sub paper, callable 7Y, at 4.4%, their first public SGD dollar issue since 2011. Finally Ezion tested waters with a small 5Y 4.85% SGD 50 million paper, suggesting that demand was swaying Stanchart that day as it is not a regular issuer.

Secondary Levels :

Hyflux 5.75% Perp last done 100/100.20
Stanchart 4.4% 01/2021 100/100.10
Croesus 4.6% 01/2017 100.80/101.00

Leaving you with the list of prices.

USD Bonds In SGX and HK 2013-2014


2013 SGD Bonds


2012 SGD Issues