Morning Commentary: Asian bonds firm; Kaisa bonds rebound; Africa Finance starts roadshow

By Christine Van Dusen

Atlanta, April 13 – Asian bonds put in a firm session on Monday, with high-grade cash notes closing unchanged to 3 basis points tighter, a London-based trader said.

“Demand from real-money accounts continued to drive the market tighter in the absence of new issues,” he said.

High-grade property companies from China continued to outperform, closing 2 bps to 10 bps tighter, he said. And high-yield property companies from China saw mostly buyers and finished the session up ¼-point to ½-point.

“India is generally unchanged, with good demand in short-end financials,” he said. “High-yield sovereigns closed unchanged to ¼-point lower on light flows.”

The long end of the curve for Malaysia-based Petroliam Nasional Bhd.’s (Petronas) bonds performed well on Monday, a trader said.

The company recently printed a $5 billion issue of notes due in five, seven, 10 and 30 years, including 2.707% Islamic bonds due in 2020 that priced at par to yield Treasuries plus 110 bps via BofA Merrill Lynch, CIMB and Deutsche Bank in a Regulation S deal.

“The Petronas complex consolidated, with Petronas’ 2020 sukuk trading down,” he said. “The long end is unchanged and well-bid.”

Kaisa reappoints CEO

Some investors on Monday were watching China-based Kaisa Group Holdings Ltd., which reappointed its founder as chief executive, a move that seemed to boost the market’s confidence in the property development company’s ability to restructure its debt.

The founder had resigned on Dec. 31.

“This improves market sentiment,” according to a report from Schildershoven Finance BV. “Market responded positively on the news. Kaisa eurobonds rebounded by about 4%.”

Africa Finance markets deal

Also on Monday, Nigeria’s Africa Finance Corp. kicked off its roadshow for a possible bond offering with a stop in Singapore, a London-based trader said.

“If AFC was thinking of a five-year deal, the obvious comparables would be [African Export-Import Bank (Afreximbank)] and Nigeria,” he said.

Afreximbank’s 4¾% 2019s were spotted at 101.75 bid, 102.75 offered on Monday while Nigeria’s 5 1/8% 2018s traded at 100.25 bid, 101.25 offered, he said.

Africa Finance is known for having an “impressive” record with non-performing loans, he said.

“It’s smaller than Afreximbank,” he said. “Unlike Afreximbank it does not have the questions regarding capital.”

Citigroup, MUFG Securities, Standard Bank and Standard Chartered Bank are arranging the roadshow, which will head to London on April 20.

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