Asian corporate and sovereign bond spreads were flat on Friday as retreating oil prices from record highs provided some relief from inflation worries, while bonds of commodities trading firm Noble Group rallied.
The new five-year bonds from Singapore-listed Noble, which benefits from high commodities prices, rallied to 501 basis points (bps) over equivalent Treasuries from the 528 bps spread at which they were sold on Thursday.
Noble attracted $3.9 billion in orders from 500 accounts for its $500 million offering, said a source involved in the deal who declined to be identified, reflecting the firm's strong outlook and attractive premiums.
"In light of the current commodities environment, Noble is looking quite attractive as they continue to deliver strong performance. For them to come into the market right now with such an issue is good," said Brayan Lai, a credit analyst at Calyon.
The rally in Noble's bonds comes as oil prices have surged more than 30 percent this year, having hit a record $135.09 a barrel on Thursday. Other commodities such as metals have also rallied, boosting profits at firms in the sector such as Noble.
The iTRAXX Asia ex-Japan high-yield index a key measure of risk aversion, was flat on Friday at 455/465 basis points, but had widened about 30 bps this week. The equivalent investment-grade index was also rangebound on Friday at 100/103 basis points.
Philippine cash bonds, among the most widely traded in the region excluding Japan, were also flat even after Finance Secretary Margarito Teves said on Friday that slower growth and high commodity prices would make it tough for Manila to stick to a balanced budget this year. "The market expected that the Philippines won't be able to balance its budget this year," said a Manila-based trader explaining the little movements seen in the sovereign bonds.
Manila's 2031 bonds were quoted at 111.5/111.875 cents to the dollar, while 2032 debt was at 96.5/96.875, both little changed from Thursday. Philippines' credit default swaps, or insurance-like contracts that protect investors against defaults or restructuring - were rangebound at 208/210.
Demand for firms further down in the credit scale could still suffer, with Indonesia's PT Truba Alam Manunggal Engineering Tbk this week shelving a $100-$150 million bond issuance.