Political concerns haunt RI's bonds<\/p>\n
HONG KONG (Dow Jones): Asian benchmark bonds held firm Friday
\nand remained well bid despite lower U.S. Treasury yields from
\nThursday's rally.<\/p>\n
Indonesia's bond spread suffered the most due to renewed
\npolitical concerns. However, some traders noted activity on
\nIndonesian bonds remained thin Friday.<\/p>\n
The latest tension between Indonesian President Abdurrahman
\nWahid and parliament over Wahid's dismissal of two ministers has
\ncast a shadow over a special parliament session in August, where
\nWahid is to deliver an accountability speech.<\/p>\n
As a result, the spread on Indonesia's 2006 benchmark bond
\nwidened by 15 basis points to 688 basis points over U.S.
\nTreasurys.<\/p>\n
The widening was further aggravated by a rally on U.S.
\nTreasurys overnight, prompted by market friendly remarks from
\nU.S. Federal Reserve Chairman Alan Greenspan.<\/p>\n
"Most of the (Indonesian spread) widening was due to the rally
\nin Treasurys," said on trader.<\/p>\n
Greenspan's speech to the Senate Banking Committee Thursday
\nsuggested that U.S. economic growth is showing signs of a
\nslowdown, thanks to the Fed's rate hikes in the past 12 months.
\nGreenspan was less hawkish than expected, which calmed earlier
\nmarket concern over a rate hike in August.<\/p>\n
Despite lower U.S. yields, Korean bond spreads managed to
\ntighten earlier Friday, benefiting from positive news in the
\nbanking sector.<\/p>\n
Credit rating agency Standard & Poor's Corp. Thursday upgraded
\nIndustrial Bank of Korea to BBB- from BB+, reflecting the bank's
\nasset quality, with a nonperforming loan ratio at 6 percent, down
\nfrom its previous ratio of 8.9 percent.<\/p>\n
Thai banks also showed signs of improvement in the second
\nquarter of the year, posting profits again. The better financial
\nclimate boosted investor confidence to tighten the spread on
\nThailand's 2007 benchmark, if only by three basis points, to 1.75
\npercent over Treasurys.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/political-concerns-haunt-ris-bonds-1447893297",
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"sponsor": "Okusi Associates",
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