Rothschild's trust eyes Indonesian bonds

Rothschild's trust eyes Indonesian bonds

SINGAPORE (AFP): The Rothschild group, which launched its Asian bond trust in Singapore yesterday, is targeting Indonesia and the Philippines as preferred markets for investments, officials said.

The factors are the Philippines' positive credit outlook and its proposed corporate tax reforms, while Indonesia is one of the "most progressive countries in the region", said Julia Ho, senior fixed income and currency fund manager of Rothschild Assest Management (Singapore) Ltd.

"I am very optimistic about the credit outlook there (in the Philippines), " Ho said at a news conference after the launch of Rothschild's first open-ended unit trust to invest in Asian bonds.

Manila's tax reforms would provide a "very good source of recurring income" for the government and improve the savings- investment gap which had been a cause of worry in the past, Ho said.

Ho also said Indonesia was one of the better performing markets but "still the yields there are very high, very attractive" mainly because investors are assigning too high a risk premium due to political risks.

"Indonesia has come a long way. It is one of the most progressive countries in the region with the deregulation of the economy" and the growing middle-class, she said.

Generally, the Asian bond markets are relatively under researched, but they offer higher yields than other international bonds, Ho said.

She added "so far the bonds haven't been given an investment grade by rating agencies because the track records of the companies have been very short."

"Rating agencies tend to be conservative, but as the fundamentals of companies operating in Asia improve, these will become investment grade in the future."

Under the Singapore-dollar denominated Five Arrows Asian Bond Trust fund launched Wednesday, the trust will invest mainly in Asian bonds issued by the governments and corporations. The trust is managed by Rothschild Asset Management (S) Ltd.

Minimum initial investment for the trust is S$5,000 (US$3,570) and subsequent investments will be in multiples of S$1,000. The launch price is set at S$1.00 per unit and the offer will close on Dec 20.

The trust is denominated in Singapore dollars and non- Singapore dollar currency exposure will be limited to under 30 percent of the portfolio.