Bonds In Conversation : No Life Without Stimulus

Stimulatory talks this week after a glorious month end lending more optimism and cheer to markets across.  gardenias

Fed – Yellen more dovish than market expectations http://money.cnn.com/2014/03/31/news/economy/janet-yellen-raise/index.html
PBoC – mini stimulus unveiled for small businesses and social housing http://www.telegraph.co.uk/finance/china-business/10741042/China-unveils-mini-stimulus-to-boost-slowing-economy.html
ECB – heading into QE even as economic growth picks up http://www.bloomberg.com/news/2014-04-03/draghi-seen-forging-different-qe-path-to-fed-in-deflation-fight.htmlBOJ – more stimulus expected after their 8% sales tax hike on 1 April which is expected to crimp household spending http://uk.reuters.com/article/2014/04/02/uk-japan-economy-prices-idUKBREA3106I20140402?feedType=RSS&feedName=businessNews

EM has become the safe haven again, Korea, Thailand and Malaysia leading the way in carry trades as anxious investors in the developed world find places to park their free cash. Only China remains taboo albeit just slightly because Chinese names are also coming back in vogue. And the world would be cheering for a poor unemployment number tonight out of the US to cement the path to more stimulus and easy liquidity.

Sinopec priced the largest ever Asian issue for USD 5 billion in 5 tranches, matching Hutchison Whampoa’s record over a decade ago, and the largest ever deal for a Chinese SOE. The books were over 4 times oversubscribed, according to sources, with US investors buying 60% of the issue size. http://www.businesstimes.com.sg/premium/companies/others/sinopecs-us5b-bond-issue-asias-biggest-decade-20140404

Defaults are also on the rise with a first default seen in China’s private junk bond market, after 2 public defaults out of Chaori Solar and Zhejiang Xingrun Real Estate. The situation would appear more dire considering a record debt payment due from the Chinese clean energy sector this quarter for US 4.2 billion. http://www.bloomberg.com/news/2014-04-04/record-clean-energy-debt-due-in-quarter-spurs-risk-china-credit.html

In the U.S., markets are unfazed by the 10th largest bankruptcy in US history out of Energy Future (former TXU) and the largest ever LBO bankruptcy in history led by a pile on of debt to the tune of US 45.6 billion and equity investors are expecting about 1% of their investments back. http://uk.reuters.com/article/2014/03/28/efh-bankruptcy-idUKL1N0MP0Y120140328?feedType=RSS&feedName=rbssFinancialServicesAndRealEstateNews

Even good old Singapore is seeing a bankruptcy this week as Brookstone Inc, a privately held company counting Temasek, JW Childs and OSIM as shareholders, plans a bankruptcy sale. http://www.bloomberg.com/news/2014-04-03/brookstone-files-for-bankruptcy-protection-after-sales-decline.html

No Olam treatment for Brookstone this time.

Singapore’s medium term interest rates rose sharply on the week, but not enough to deter 2 new issues out of Swiber (Vallianz’s parent) and Vibrant Group.

Markets are also keeping good cheer with substantial buy backs seen in equity space out of the local banks – OCBC and DBS, along with some of the TLCs.

As for me, I attended a funeral this morning of a nice, old lady who was a terrific mother and grandmother, and made awesome fried mee siam. There is no best time to go and no amount of stimulus can bring some back.

Leaving you with the prices.

US Bonds Listed in SGX and HK

USD BONDS

2014 SGD Bonds

SGD 2014 CORPORATE BONDS

2013 SGD Bonds

SGD 2013  NEW ISSUES