New issue premiums could spike amid US woes

Bond investors could demand higher new issue premiums in the coming days, especially if the US debt ceiling debate remains unresolved triggering risk aversion sentiment.
US President Barack Obama said he would accept a short-term increase in the country’s borrowing authority in order to avoid a crisis.
US President Barack Obama said he would accept a short-term increase in the country’s borrowing authority in order to avoid a crisis.

New bond issuance especially higher beta names could struggle to price competitively in the coming days. The ongoing US debt ceiling debacle could prompt credit investors to demand higher premiums, which are hovering around the 5bp-10bp level, according to experts.

“At the moment, premiums are relatively negligible but, as you move to the end of this week, that may increase a little bit,” said a Hong Kong-based debt syndicate banker to FinanceAsia. “High beta credits are going to have to pay a bit more.”

There were signs of stepped-up efforts in the US on Monday to resolve the fiscal crisis, with President Barack Obama saying...

¬ Haymarket Media Limited. All rights reserved.

FinanceAsia has updated its subscription model.

Registered readers now have the opportunity to read 5 articles from our award-winning website for free.

To obtain unlimited access to our award-winning exclusive news and analysis, we offer subscription packages, including single user, team (2-10 users), or office-wide licences.

To help you and your colleagues access our proprietary content, please contact us at subscriptions@financeasia.com, or +(852) 2122 5222

Article limit is reached.

Hello! You have used up all of your free articles on FinanceAsia.

To obtain unlimited access to our award-winning exclusive news and analysis, we offer subscription packages, including single user, team (2-10 users), or office-wide licences. To help you and your colleagues access our proprietary content, please contact us at subscriptions@financeasia.com, or +(852) 2122 5222