Bonds In Conversation : Bad Bonds, Bad Bonds, Whatcha Gonna Do ?

Whatcha gonna do ? Whatcha gonna do
When they come for you?
~ Bob Marley

Karma beckons as we get more and more calls for bubble in credits, the latest now from the head of Sweden’s largest private equity firm.
I am not sure if they are all being politically correct and afraid to offend the little guys in Asia, but most reports are still bullish on Asian and EM credits. An example in a report I read out of Bond Vigilantes below.
And thus it is the latest fad and fashion to be lambasting credits and I have been doing more than my fair share of it this entire year.
The ingredients for the recipe of disaster (rehashed) :
1. Shrinking Margins
2. Size of Market and AUM
3. Bubble Warnings
4. Absence of Bond Traders
5. Volatility Is Back
as I had listed last month in my post :

Throw in retail participation (who are less discerning and actually good for diversification of customer base) and the implementation of Dodd-Frank, we are beginning to see liquidity problems in the marketplace that may escalate into a stalemate that will see new high yield issuance crippled in the months ahead.
All this happens when the rally ends, for no one would complain when prices are going higher and profits are being made.
Link to article on an S&P report on expectations of a big slowdown in the leveraged loans market –
And the same for bonds according to the IMF as shown in the chart below.

liquidity crisis

Not so much a problem for a company like Ali Baba which managed to price 8 bio with much ease this week although some of my friends found it too expensive to be including in their portfolios for the A1 rating that the company commands.
As long as the stock markets hold up and the S&P continues to make all time highs like it did this week, along with mega sized takeover and mergers deals which typically signifies a market top.
From the chart, we are near 2007’s dangerzone.
And finally, something for us to think about – what the Ultrarich are doing.
“Ultra-rich investors are stockpiling cash, and to offset the drag on their portfolio they’re increasing allocations to private equity, according to the most recent quarterly survey of members by Tiger 21, a network of entrepreneurs, fund managers and corporate executives.”
If no one would listen to me, perhaps they would listen to the billionaires.
On the subject of billionaires, Singapore has added 40 Ultra High Net Worth individuals in the past year, not as remarkable as the rest of the world but noteworthy in that their wealth is growing significantly faster (than who ??, I ask).
Singapore bond markets are also frozen over with some horror stories out of Reuters.
Traders have lost their marbles ? and what happened to Swiber ? I notice that one of their bond issues, the 6.5% 08/2018 one losing like 7cts in a week.
No news out of Swiber and if I were them, I would be happily buying their papers back at 90 cts just to prove that they have the cash and also to lock in a profit on their liabilities. This is exactly what the US banks were doing back in 2008/2009, recognising unrealised profits from reduced liabilities (crashing bond prices) which is a big hint to Swiber’s accountants (and please donate generously to keep this website and my ideas coming).
New issues are still coming strong, we have a SGD 500 mio HDB 12 Y today and Protelindo yesterday along with Sembcorp the day before.
Demand (and Bob Marley) lives and you have been warned. Because Whatcha gonna do when they come for you ?
Leaving you with the prices that I am not sure about.
USD Bonds
SGD 2014 Issues
SGD 2013 Issues