Morning Commentary: Greece on market’s mind; Asian bonds mixed; Ukraine makes progress

By Christine Van Dusen

Atlanta, July 2 – Investors were in wait-and-see mode on Thursday morning after the previous day’s eurogroup meeting about the Greece crisis ended without any progress. A referendum is expected on July 5.

Most corporate bonds from Asia were firm, following some positive overnight momentum, with investment-grade names moving between 2 basis points and 5 bps tighter, a London-based trader said.

“Sovereigns are a mixed bag,” he said. “Philippines’ 2040s are unchanged, with off-the run, mid-curve bonds up 1/8-point to ¼-point.”

He also noted that investors were buying sukuks, which outperformed during the session.

Meanwhile, Ukraine was taking steps toward solving its own economic crisis.

“The especially positive tone of a joint communiqué between Kiev and its creditors could mean they have reached some understanding over the main point of the negotiations – a principal haircut,” according to a report from Schildershoven Finance BV. “The statement could have a strong positive affect on Ukrainian sovereign bonds.”

Indeed, sovereign bonds have risen ½-point on the news, said Fyodor Bagnenko, a fixed income trader from Dragon Capital.

“Ukraine’s meeting with bondholders in Washington seems to have brought modest progress,” he said. “The Ukrainian Finance Ministry stated the sides agreed on confidentiality arrangements that allowed for proceeding to ‘principal-to-principal’ talks next week.”

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