Morning Commentary: Asian notes firm as buyers emerge; Pacific Rubiales sees light selling

By Christine Van Dusen

Atlanta, July 10 – Asian bonds finished Friday’s session on firm footing – with some investment-grade names tightening as much as 10 basis points – at the end of a week made tumultuous by the continuing crisis in Greece, oil prices, stock market trouble in China and an aborted takeover of Latin America-focused Pacific Rubiales Energy Corp.

“It’s been a week of despair and concern that the market could break under the strain of Greece, China and commodities, then ending on a feeling of 'get me in' as we see everything turn positive,” a London-based trader said. “A Greek deal is looking possible; China stocks are bouncing.”

Real-money investors were buyers of Asian bonds on Friday morning after a sell-off in U.S. Treasuries, while fast-money accounts sold into the rally in anticipation of increased demand, a London-based trader said.

“Korea ended the day with mixed spreads, unchanged to 5 bps tighter,” he said. “India saw better buying.”

In other trading, Turkey’s 2026 4¼% dollar bonds were spotted at 96.25, tighter by 8 bps.

Looking to Pacific Rubiales – after the news that Mexico’s Alfa SAB de CV and Harbour Energy Ltd. were withdrawing their takeover bid – strength in trading of its bonds tapered on Friday, with some small selling, a New York-based trader said.

Dealers managed their inventory well, he said, and didn't flood the market on a low-volume Friday.

Though issuance has been scarce, one trader said he expects supply to pick up next week, ahead of the official summertime doldrums.

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