International bond markets burst back into life in Asia on Tuesday as at least eight Asian companies braved a risk-averse climate, collectively raising close to $6 billion in a single day.
Market conditions were less than ideal as investors fretted about the looming presidential elections in France and escalating US-North Korean tensions, which boosted demand for safe-haven assets and pushed 10-year US Treasury yields down to five-month lows.
However, Bank of China was among those unfazed by the increased volatility after it sold a $3 billion multi-currency deal, which the lender dubbed "Silk Road" bonds in honour of the country's One Belt, One Road initiative. Property developer Yida China and Oil India pressed ahead too with their funding plans, mindful of the upcoming Easter break, according to bankers, who also cited evidence to show there was still plenty of money to be put to work in Asian foreign currency bonds.
“On a positive note, the level of primary supply in the G3 bond markets reflects the depth and breadth of liquidity,” a syndicate banker told FinanceAsia. “Investors globally continued to pour into emerging market bonds, putting a net $18 billion into the market in the first quarter.”
Other borrowers included Citic Securities, Golden Wheel Tiandi, China Oil & Gas, Korea Expressway, and Lianyungang Port, a local-government financing vehicle.
All eight companies saw their new bonds weaken slightly in secondary market trade, nonetheless.
Taking a cautious view, one Singapore-based fund manager noted that expectations the new Donald Trump presidency would usher in business-friendly tax reforms and increased infrastructure spending in the US had largely run their course, at least for now. This pause in the Trump reflation trade had repercussions for bond pricing in Asia, because of how the market had behaved in late 2016, as investors turned to the region for yield, the fund manager said.
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