Asian bonds firm; Cnooc notes get attention; Brazil sees some action; Codelco outperforms

By Christine Van Dusen

Atlanta, May 4 – Asian bonds firmed slightly on Monday morning on the move in U.S. Treasury rates and Venezuela and PDVSA managed to build on the positive momentum of the previous week on a mostly slow day for emerging markets assets.

“Liquidity is very thin today, with Japan and the United Kingdom out on holidays,” a London-based trader said.

Asian high-grade bonds tightened about 2 basis points, with most of the activity focusing on new issues.

The new issue of notes from Hong Kong’s Cnooc received some attention during the early part of the session, with the new 3½% 2025 notes that priced at 99.075 to yield Treasuries plus 160 bps trading at 158 bps before closing in Asia at 158 bps bid, 156 bps offered.

China Petrochemical & Chemical Corp. (Sinopec)’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 in focus

Brazil’s 2025 notes traded early Monday at 98½ and 98¼ after being spotted at 98½ on Friday, another trader 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.

By the end of the day, low-beta names from Brazil were slightly wider, he said.

Venezuela, PDVSA climb

Venezuela and PDVSA saw prices march higher by 25 cents to 50 cents on Monday, a trader said.

Meanwhile, Argentina’s bonds were mostly unchanged or slightly higher, with the Boden 2015s seen at 99.15.

“Flows have been light to start the week, with some better selling of Brazil seen early on,” he said.

Most bonds from Mexico were unchanged on Monday, with prices moving along with Treasuries, another trader said, and high-grade names were quiet.

Chile could issue

Market sources were also whispering about a possible issue of up to $1 billion of bonds from Chile.

An outlier from there, Corporacion Nacional del Cobre de Chile (Codelco), continued to tighten on some real-money demand, a trader said.

Corporate bonds from Colombia were very quiet on Monday, he said.

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