Asian bond spreads widened on Wednesday as concerns about inflation returned after oil hit another record high, while credit crisis fears were revived when an influential analyst slashed her earnings outlook for top US banks. Even so, Asian issuers continued to sell new debt.
Singapore-listed commodities trading firm Noble Group set the yield range for its sale of $500 million in five-year bonds at 8.5 to 8.75 percent, a source involved in the deal told Reuters.
That would mark a small premium to Noble's existing bonds due in 2015, which on Tuesday traded at a yield of 8.25 percent. The iTRAXX Asia ex-Japan high-yield index, a key measure of risk aversion, widened by about 10 basis points (bps) to 437/442 bps.
The equivalent investment-grade index widened by around 3-5 basis points to 92/95, according to a trader. "We've got all these negative factors, mainly oil and inflation, and more potential writedowns at US banks," said the Hong Kong-based dealer.
The concerns over inflation and further global banking woes also hit Asian shares, with the MSCI measure of regional stocks outside Japan down 0.4 percent as of 0810 GMT.
Philippine cash bonds reversed two previous days of gains, with the 2031 bonds traded at 112/112.25 cents to a dollar and its 2032 bonds at 96.75/97.125, booth down a quarter of a point Manila's credit default swaps (CDS) - insurance-like contracts that protect against default and restructuring - widened by several basis points to 198/204 bps.
Asian issuers are increasingly willing to sell debt denominated in dollars, euros and yen, with volume so far this month reaching $2.1 billion, up from $1.9 billion in April, according to Thomson Reuters data. Still, overall volume in the so-called G3 currencies so far this year is still down 59 percent from the equivalent period in 2007, with only $10.5 billion worth of debt sold.
Unified Holdings, a unit of Philippine power producer First Gen, is looking at issuing a global bond amounting to $400 million, an official at the parent company told Reuters on Wednesday. Deutsche Bank and J.P. Morgan have been hired as advisers for the possible deal, Giles Puno, chief finance officer at First Gen, told Reuters, with a source saying earlier the company would meet with investors in Asia and Europe.
Meanwhile, Indonesia's PT Truba Alam Manunggal Engineering Tbk, rated high-yield by both S&P and Fitch, is still looking to price $100-150 million in three-year senior unsecured bonds at a yield of 17 to 18 percent.
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