Bonds from Philippine conglomerate Alliance Global Group Inc rose on their Asian debut on Friday, underpinned by heavy demand from investors searching for higher returns and a firmer, broader market. The overall market rebounded and spreads narrowed after jumping to their highest in more than three weeks in the previous session, as a string of recent weak US economic data deterred investors from buying riskier assets.
Sri Lanka picks banks for $1 billion bond sale plan The Asia ex-Japan iTraxx investment-grade index narrowed 2 basis points (bps) to from Thursday's close to 123, traders said. The index has narrowed from this year's high of 172.17 bps reached in late May, but it has widened 8 bps so far this week, its first weekly jump since July 2, on growing concerns that the US recovery is stalling.
The investment-grade Markit iTraxx Europe index narrowed to 112.6 bps from 114.5 bps late on Thursday in London. Asian stocks edged up, with the MSCI Asia Pacific ex-Japan index up 0.8 percent as of 0351 GMT. Asian spreads may end the year tighter than current levels, as ultra-low interest rates in developed markets and a far more upbeat economic outlook for the region will drive investors into its high-yielding debt, traders said.
One of the session's most actively traded credits was AGI's newly-issued debt, which traded as high as 102.50 cents on the dollar before easing to 101.50, still well up from its issue price of 99.309, traders said. AGI sold $500 million of 7-year bonds on Thursday at 6.5 percent, lower than its target of between 6.625 percent to 6.75 percent.
The issue size was raised from a planned $400 million due to strong demand from investors, a source said. The deal attracted more than $3.7 billion in orders. AGI is engaged in food and property and owns Megaworld Corp, one of the biggest local developers. On Thursday, Megaworld reported that its first-half profit rose 12 percent from a year ago.
The bond also offered a yield pickup of up to 200 bps against comparable Philippine sovereign dollar debt, a Manila-based trader said, making it more attractive to investors. Investors from Asia took 89 percent of total sales, Europe 7 percent and offshore US accounts 4 percent. AGI is the third corporate issuer from the Philippines this year after International Container Terminal Services Inc and Rizal Commercial Banking Corp.
The market is now eyeing Sri Lanka's planned $1 billion sovereign bond sale, after the central bank on Thursday mandated three banks to manage the sale. Sri Lanka's bond due in 2014 was up half a point to 109 cents on the dollar, traders said. On the sovereign sector, the iTraxx SovX Asia Pacific index, which tracks the 5-year sovereign credit default swaps (CDS) of 10 countries in the region, narrowed 3 bps.
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