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Morning Commentary: Asian bonds firm; Cnooc notes get attention; Brazil weakens, then improves
By Christine Van Dusen
Atlanta, May 4 – Asian bonds firmed slightly on Monday morning on a move in U.S. Treasury rates, with high-grade bonds tightening about 2 basis points and most of the activity focusing on new issues.
“Liquidity is very thin today, with Japan and the United Kingdom out on holidays,” a London-based trader said.
The new issue of notes from Hong Kong’s Cnooc Ltd. received some attention during the early session, with the new 3½% 2025 notes that priced at 99.075 to yield Treasuries plus 160 bps trading at 158 bps before closing at 158 bps bid, 156 bps offered.
China Petroleum & Chemical Corp.’s new 3¼% notes due 2025 that priced at 99.022 to yield Treasuries plus 145 bps were “a touch tighter at 146 bps bid, 143 bps offered,” the trader said.
Among Asian sovereigns, the long end of Indonesia’s curve opened down 1 point to 1¼ points while the belly lowered ½-point, he said.
“But we had some buying interest into day’s end, with Indonesia’s 2045 trading up at 102.35,” he said. “The Philippines curve outperformed Treasuries, with the long end about ½-point to ¾-point lower.”
From Latin America, trading was mostly quiet on Monday morning, with bonds from Brazil at first widening from Friday’s close, a New York-based trader said.
Brazil’s 2025 notes traded early Monday at 98.5 and 98.25 after being spotted at 98.50 on Friday, he said.
But cash prices firmed a bit as Treasuries moved slightly higher, with the 2025s moving to 98.60 later on Monday morning, another trader said.
“Some early morning Treasury volatility is making it a bit difficult for price discovery on an already slow Monday morning,” he said.
Venezuela and PDVSA managed to build on the positive momentum of the previous week, he said, and Argentina’s bonds were mostly unchanged or slightly higher.
“Flows have been light to start the week, with some better selling of Brazil seen early on,” he said.
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