SINGAPORE (June 30): Phillip Capital analyst Timothy Ang anticipates a quiet bond market this week as investors wait with baited breath for Fed Chairman Jerome Powell’s testimony to congress (Wednesday), URA’s q-o-q results (Wednesday) and key data on the Singapore economy (Friday) later this week. The result of both announcements will likely influence market confidence and trade volumes going forward.
Asian USD Investment Grade bonds spreads remain largely unchanged, finishing at 203 base points while trading in the cheaper zone between their 10-year average with a +1 standard deviation spread. Asian USD high yield spreads tightened 15 base points w-o-w to finish at 770 base points, with high yield spreads trading higher than the 10-year +1 standard deviation spread, implying investor caution against Covid-19 risks.
Shorter one-year and 5-year tenors remain largely unchanged, with one-year falling 1 base points and 5-year rising by 1 base point. Yet, 10-year yields have seen a 3 base point rise w-o-w to end higher at 0.92%. Ang notes that this is unlike 10-year US Treasury yields falling five base points w-o-w amid rising market uncertainties.
“We expect yields to be depressed this week as risk-off sentiments drive government bond prices lower,” Ang says, noting that spreads between Singapore government bonds and US Treasuries are wider between the two- to five-year tenors and the 10-year maturities.
Ang also highlights new bond releases in the past week. Singapore Technologies Telemedia Pte Ltd, a wholly-owned subsidiary of Temasek Holdings, has issued a $375 million perpetual bond callable on 2 July 2027 with a final price guidance of 4.1%.
Demand for the bond was overwhelming with an order book exceeding $2 billion, with some 98% of this demand coming from Singapore.
For bonds maturing this week, Century Sunshine Group Holdings Limited bond CENSUN 7% ‘20s will mature this Friday on 3 July 2020. The company has postponed its extraordinary general meeting scheduled for 18 June 2020. It seeks to raise HK$300 million ($53.9 million) to refinance its debts.
Oxley Holdings Limited have also announced the sale of Chevron House for a total consideration of $315 million to boost liquidity. The firm will receive an estimated $200 million on completion of the sale.
