Slumping sales of new corporate bonds denominated in Singapore dollars and yields jumping to a more than two-year high suggests opportunities for finding value, according to Oversea-Chinese Banking Corp.
Debt sales fell 49% to $8.6 billion in the first six months of this year from the same period of 2012, according to data compiled by the bank, Singapore’s third- largest. Average yields climbed to 3.38% on July 8, the highest since March 2011 and up from 2.47% on April 30, which was the lowest since July 2012, according to indexes compiled by HSBC Holdings Plc.
Local-currency corporate bonds in May and June marked their worst two-month performance since August 2003 after the Federal Reserve signaled plans to reduce stimulus, nearly freezing the market for newcomers. Heineken NV raised $95 million in the only sale in June, while sales this month through yesterday amounted to $1.08 billion.
“Singapore dollar bonds were being issued at very tight levels prior to the market recent closure,” Jerry Gwee, a credit strategist at OCBC, said in an interview yesterday. “As the market reprices with expectations of the Federal Reserve’s tapering plan, primary issues may come again at more attractive yield levels for funds and private banks.”
United Overseas Bank, the city-state’s second-largest lender, sold $850 million of perpetual bonds yesterday to help redeem debt. The sale attracted about $2 billion of orders and 74% of the notes were sold to private banks, according to a person familiar with the matter who asked not to be identified because the details are private.
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