Morning Commentary: Asian bonds tighten slightly; Sri Lanka dips; Pakistan weakens; Angola on deck

By Christine Van Dusen

Atlanta, Oct. 30 – Asian bonds opened unchanged to slightly tighter on Friday, with some technology names seeing some profit-taking, while Sri Lanka’s new issue ticked lower and investors awaited new notes from Angola.

Investment-grade financial names from Asia opened firmer, with spreads tightening 2 basis points to 4 bps.

“The Korea sector outperformed today,” he said. “In Philippines and Indonesia, the long end was down about 1 point while the belly was about ½ point lower.”

And Sri Lanka’s new $1.5 billion 6.85% notes due 2025 that came to the market Tuesday at par were seen weaker again on Friday at 99 bid, 99.25 offered after trading Thursday at 99 3/8 bid, 99 5/8 offered.

Citigroup, Deutsche Bank, HSBC and Standard Chartered were the bookrunners for the Rule 144A and Regulation S deal.

From Ukraine, bonds entered the end of the week with two-way flows in quasi-sovereign banks, said Fyodor Bagnenko, a fixed income trader with Dragon Capital.

“Finance Minister Jaresko announced an exchange date of Nov. 12 for the sovereign bonds and also said that Russia did not participate with its $3 billion bond,” he said.

Bonds from Pakistan were weaker on Friday morning as peripheral sovereigns from Asia saw some selling, another trader said.

“We have seen real money adding in the sukuk and most are happy to own the curve here and still like the story,” he said.

The sovereign’s recent issue of $500 million 8¼% notes due Sept. 30, 2025 that priced at par on Sept. 24 traded Friday morning at 106.88 bid, 107.62 offered.

Citigroup, Deutsche Bank and Standard Chartered were the bookrunners for the Rule 144A and Regulation S deal.

In deal-related news, investors were still keeping an eye out for Angola’s debut bond, which is expected to total about $1.5 billion and carry a 10-year tenor.

“We think Angola might need to offer a yield closer to the 10% area, in current market conditions,” a trader said. “Investors will demand a concession for the large issue size.”

The proceeds will be used to finance future infrastructure projects.

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