ECB remarks push yields lower; Malaysia Airports deal ahead; Indonesia, Argentina in focus

By Christine Van Dusen

Atlanta, Aug. 25 – Yields for euro-denominated bonds lowered on Monday in response to European Central Bank President Mario Draghi’s call for fiscal reforms and the suggestion that the organization is prepared to take steps to buoy the economy.

“The comments were interpreted by some market participants as a door opener for further quantitative easing measures,” according to a report from Erste Group Research.

Also impacting market sentiment was the news that the pace of new-home sales dropped in July, which on Monday sent U.S. Treasury yields to their lowest level in more than a year.

In deal-related news, Malaysia Airports Holdings Bhd.’s upcoming issue of ringgit-denominated Islamic bonds will carry a perpetual maturity, a market source said.

CIMB, HSBC and Maybank are the bookrunners for the Regulation S deal.

The Subang, Malaysia-based investment holding company operates in five segments through its 25 subsidiaries, including duty-free and non-dutiable goods, airport services and hotel management.

Also on Monday, market sources where whispering about Indonesia’s upcoming issue of Islamic bonds via CIMB, Emirates NBD, HSBC and Standard Chartered Bank.

The issue could come to the market with a yield of 3.8% to 4˝%, a market source said.

And Egypt canceled a bond auction after a previous auction raised less funds than expected, a market source said, noting that the sovereign was concerned that investors might demand too high a yield.

Investors also kept an eye on Argentina, which saw bond prices decline last week after the sovereign unveiled its latest attempt to exit default. On Monday, Argentina’s 25-year bonds were unchanged, as were the two-year bonds, on a yield basis, a trader said.

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