Asian bonds soften after Bangkok explosions; Turkey and China oil bonds under pressure

By Christine Van Dusen

Atlanta, Aug. 17 – Asian bonds were softer on Monday on the news of explosions in Bangkok, and notes from Turkey were under pressure during a low-liquidity session for emerging markets assets.

“This is the second explosion headline this month, as the Tianjin chemical factory incident last week startled the market and China’s government remained highly alert on domestic safety and crisis management,” a trader said. “The market continued to feel week, post-the [Chinese currency] devaluation.”

High-grade cash bonds from Asia finished the early session unchanged to 2 basis points wider, a London-based trader said.

“Crude continued to go lower, but China oil [bonds] managed to open unscathed,” he said. “However, post-London open we did see some pressure, and spreads closed a couple basis points wider.”

Bonds from Malaysia moved as much as 8 bps wider, with credit default swaps spreads widening about 7 bps to 180 bps, he said.

“India announced plans to overhaul their public sector banks,” he said. “Equities were up while credit was roughly unchanged.”

From Indonesia, most sovereign cash bonds held in well on Monday morning but the 2024s got “hammered,” another trader said.

“Dealers running light following the buy flow late last week,” he said.

Meanwhile, Turkey’s bond market was under pressure as political uncertainty hurt demand, according to a report from Schildershoven Finance BV.

“We expect some further price decline, as the prospects of recovery are cloudy,” the report said.

Looking to Brazil, the bond market continued to grow “as the latest demonstrations were not as big as expected, and as more and more social and business groups have voiced support for the government’s economic course,” Schildershoven said.

Lat-Am in focus

In other trading from Latin America, low-beta spreads were mostly unchanged at the end of the session, with Brazil’s credit default swaps spreads finishing at 306 bps from 305 bps, a trader said.

Mexico’s credit default swaps were unchanged at 138 bps.

Cash prices firmed up as Treasuries rallied, he said, and Venezuela ended the day mixed while Argentina was unchanged.

Overall, Monday’s was “a characteristically quiet summer session,” according to a report from Barclays Capital. “Market attention shifted back to stronger United States growth and the prospect for near-term Fed tightening.”

Ukraine sees selling

Bonds from Ukraine entered the week with some selling of corporates while quasi-sovereigns remained quiet following the conclusion of debt talks in San Francisco, said Fyodor Bagnenko, a fixed -ncome trader with Dragon Capital.

Ukrainian bonds are expected to trade relatively flat until a final decision on debt restructuring is made, market sources said.

Shenzhen Youkaisi plans bonds

Logan Property Holdings Co. Ltd. subsidiary Shenzhen Youkaisi Investment Co., Ltd. said it plans to issue RMB 2.5 billion of five-year bonds.

Citic Securities Co. Ltd. and China Merchants Securities Co., Ltd. will act as joint lead underwriters.

This will be the company’s initial tranche of bonds. Last Friday the company announced it received approval to issue up to RMB 5 billion of domestic corporate bonds, with the first tranche be completed within 12 months and the remaining tranches to be completed within 24 months.

Proceeds from the first tranche will be used to repay debt and to replenish general working capital.

Logan Property is a Shenzhen-based real estate development company.

Kexim to issue notes

Korea Export-Import Bank plans to price dollar-denominated floating-rate notes, according to a 424B5 filing with the Securities and Exchange Commission.

Goldman Sachs is the bookrunner.

Proceeds will be used for general operations, including extending foreign currency loans and for the repayment of debt.

Kexim is a lender based in Seoul, South Korea.

Sino-Ocean set to print bonds

Sino-Ocean Land Holdings Ltd. said it received approval from the China Securities Regulatory Commission on Aug. 12 to issue up to RMB 10 billion of corporate bonds.

Indirect wholly owned subsidiary Sino-Ocean Land Ltd. will be the issuer.

The bonds will have maturities of no more than 15 years.

Proceeds will be used to repay existing debt and to replenish general working capital.

Sino-Ocean Land is a Beijing-based property developer.

Marisa Wong and Aleesia Forni contributed to this article.

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