Noble bonds gain on debut

Bonds from Singapore's Noble Group gained on their Asian debut on Monday, reflecting continued strong demand for the region's high-yielding corporate credits, while the broader market was firmer, tracking gains in equities.
The Asia ex-Japan iTraxx investment-grade index narrowed 2 basis points (bps) versus Friday's close to 118, traders said. The index posted its biggest monthly decline in a year in July, as worries about the European debt crisis ebbed.
The investment-grade Markit iTraxx Europe index was steady at 105 bps. "The base-case scenario looks like we will have a cooler third quarter in terms of global economic growth and that has been largely factored in by the market," said Brayan Lai, credit analyst at Credit Agricole CIB.
Singapore-listed Hong Kong commodities firm Noble Group on Friday sold $750 million of 5-year and 10-year bonds, callable after 5 years. The sale attracted $2.8 billion in orders, a source close to the deal said on Monday. The 5-year bond traded at 1100.50 cents on the dollar on Monday, up from its issue price of 99.842, traders said.
Investors from the United States bought 75 percent of the 5-year issue, Europe 18 percent and Asia 7 percent. Asset and fund managers bought 75 percent of total debt sold, insurers and pension funds 11 percent, banks 5 percent and retail and other investors for the rest. The 10-year debt, callable after 5 years, traded at 101.375 cents on the dollar, also up from its issue price.
Asian investors bought 58 percent of the 10-year bonds, US 31 percent and Europe 11 percent. Asset and fund managers took in 53 percent of total debt issued, retail investors 23 percent, banks 11 percent, agencies, pension funds, insurers and other investors accounted for the rest. Investors who failed to buy from the primary market were buying the bonds this morning, traders said, attracted by its high yields versus Noble's existing bonds.
Noble's new 10-year debt offered a yield pickup of around 25 to 40 bps versus its existing debt due in 2020, one trader said. "We continue to see money flowing into the region and flows are still buoyant. But there will be supply concerns in the immediate pipeline," Lai said.
Another Singaporean firm, STATS ChipPAC, plans to sell $600 million of 5-year bonds, callable after three years, as early as this week, traders said. The firm, a leading service provider of semiconductor packaging design, assembly, among others, earlier said it planned to buy back its debt due in 2011. Issuers are rushing to sell debt ahead of an expected lull in the primary market in August, when many investors are away for the summer holiday.
On the sovereign front, Philippine dollar bonds rose on the government plans to issue global peso bonds instead of dollar debt to fund a wider deficit, easing supply woes, traders said. The country's debt due in 2020 was traded up half a point to 116.125 cents on the dollar, traders said. The iTraxx SovX Asia Pacific index, which tracks the 5-year sovereign CDS of 10 countries in the region including Vietnam, was flat at 116, traders said.