Emerging Asian bond spreads wider<\/p>\n
HONG KONG (Reuters): Asian benchmark bond spreads were broadly
\nwider on Monday as investors opted for safe-haven U.S. Treasuries
\nover emerging market volatility fueled by gyrations on global
\nequity markets.<\/p>\n
\"The key question is whether investors believe that a bottom
\nwas established last week,\" Raja Visweswaran, head of Asia
\nsecurities research at Bank of America, said.<\/p>\n
\"Our view on this issue is that the concept of a market bottom
\nis fairly iffy at a time like this, when investor focus is firmly
\non quality... second-tiers and the more speculative (bonds) are
\nstill not in favor,\" he said in a note to clients.<\/p>\n
A-grade bonds have been the best performing fixed income
\nassets in Asia in recent weeks. At 201 basis points (bps) over
\nU.S. Treasuries on average, they are just inside the 52-week wide
\nspread of 205 bps and are well outside the narrowest 52-week
\nspread of 150 bps.<\/p>\n
Spreads on major Asian sovereign and corporate issues were
\nfive to 10 bps wider over Treasuries on Monday, sources said.<\/p>\n
The unexpected outlook downgrade of the Philippines by
\nStandard & Poor's to negative from stable last week was labeled
\nas harsh by the country's central bank chief on Friday.<\/p>\n
\"It was rather harsh given the Philippines has a democratic
\nprocess for change. To say there is uncertainty is exaggerated,
\nbecause obviously political solutions will be found and none of
\nthese will be violent means,\" central bank governor Rafael
\nBuenaventura said.<\/p>\n
The ratings agency cited political uncertainty as the
\nmotivation for its move and Buenaventura's protestation provided
\nno support for the country's sagging sovereign bonds.<\/p>\n
The 9.875-percent Philippine 10-year benchmark bonds were
\nquoted around 718 bps over Treasuries from 678 bps on Friday.<\/p>\n
Corporate issuers were also dealt a blow with S&P revising
\nit's outlook downward on a raft of issues.<\/p>\n
Beleaguered Internet and telecom group Pacific Century
\nCyberWorks (PCCW) suspended trade on Monday pending an
\nannouncement about a proposed share offer and a convertible bond
\nissue in a wholly-owned subsidiary of the company.<\/p>\n
It said several derivative warrants would also be suspended.<\/p>\n
\"The board of Pacific Century CyberWorks is meeting this
\nmorning to consider certain proposals to strengthen and broaden
\nthe capital base of the company,\" PCCW spokeswoman Joan Wagner
\ntold Reuters.<\/p>\n
Speculation in Hong Kong was rampant on Monday morning as to
\nwhat PCCW was concocting. The company's stock has plunged some 40
\npercent over the last month as negative sentiment towards
\nInternet and telecom sectors has intensified.<\/p>\n
Shareholders of Indonesian cement giant PT Indocement Tunggal
\nPrakarsa on Friday approved a landmark $1.1 billion debt deal
\nreached earlier this year with creditors.<\/p>\n
The deal restructures the Indocement debts over eight years,
\nincluding two years' grace, company officials and participants at
\na meeting of shareholders in Jakarta said.<\/p>\n
Shareholders, which include the government with 45.5 percent
\nof Indocement, also agreed to pave the way for German cement firm
\nHeidelberger Zement AG to take a stake in the company, but no
\nactual mechanism for this has been approved yet.<\/p>",
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