SINGAPORE, May 2 (IFR) - The long-end of bonds from the
Republic of Philippines jumped in secondary after Standard and
Poor's moved the sovereign up to investment-grade status.
The upgrade, the second from the three major agencies, makes
the bonds of the sovereign eligible for three of Barclays IG
indices, which are used as the benchmark for a total of almost
USD62trn in assets under management.
While the sovereign will have a very small weighting in the
indices, the sheer potential demand was enough for fast money to
jump on the bonds.
"You would expect people to have already discounted the
second upgrade, but it seems like they hadn't," said one trader
The long-end outperformed as investors sought more convex
bonds that should do better as the technical bid for the
sovereign kicks in. The 2030s, 2032s and 2034s all traded up
75ct to USD1 closing with bids at 172.85, 136.65 and 140.85,
Meanwhile, Indonesia saw the outlook on its BBB- rating from
S&P moved to stable from positive. As accounts focused on the
Philippines, however, there was little movement on the bonds of
Indonesia, which ended the day unchanged.
Elsewhere, the recently issued bonds from Chinese
state-owned entities, such as Sinopec and CNPC, all widened
1bp-2bp on the back of the jumbo 4-tranche deal from CNOOC,
which could reach a total amount of USD4bn.
In spite of the price pressure, traders said there was not a
lot of selling of the bonds as investors were expecting CNOOC to
come out with a jumbo to fund the refinancing of the acquisition
"Everyone is waiting for the price revision before
positioning themselves," said one trader. The issue is that, if
CNOOC tightens guidance, it may not widen the secondary levels
of its peers.
Otherwise, high-yield saw a few scrappy trades, with demand
seen especially for the bonds with higher coupons, such as the
2018s of Glorious Properties and Greentown, which both ended
roughly 25ct higher in price terms.
Bonds offering higher carries had been in demand by private
banking and retail accounts as they put cash to work, traders