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Emerging Debt - Asian benchmarks attract bargain buyers

HONG KONG: Asian bond spreads narrowed by up to five basis points on Monday as investors moved in on some of the liquid benchmark issues after last week's sell-off.

Dealers said the strong performance of Latin American debt on Friday in the wake of a sell-off in the underlying U.S. Treasury bond market also lent a better tone to the Asian markets.

"The recent period of weakness in Asian credit markets is exposing some interesting buying opportunities," analysts at Barclays Capital said in a note to clients.

The bank favours Asian benchmark eurobonds in particular, which it said were well supported by the region's external liquidity position, strong economic growth prospects and an expected dearth of new issues.

U.S. Treasuries finished lower on Friday as nervousness about prospects for more aggressive rate hikes by the Federal Reserve encouraged traders to lock in some profits after recent gains.

The U.S. bond market ignored a report by the Commerce Department showing that durable goods orders fell 2.3 percent in February, their sharpest drop since April 1999.

INDONESIAN DEBT STEADY ON ASTRA NEWS

Outstanding Indonesian debt prices went largely unchanged on the back of news that Singapore-based car distributor Cycle & Carriage Ltd (C&C) would lead a consortium that would take a controlling stake in Astra International.

C&C will pay $310 million of the estimated total purchase price of $506 million or 3,700 rupiah per share for a 38.4 percent stake in Astra.

The other members of the consortium included the Government of Singapore Investment Corp Pte Ltd, Lazard Asia Fund, P.T. Bhakti Investama and Batavia Investment Fund II Ltd.

Astra's three tranches of restructured debt, due 2001, 2005 and 2006, have improved steadily in recent weeks in anticipation of a successful bid emerging for the equity stake held by the Indonesian debt restructuring Agency, IBRA.

Analysts said the eventual winner was positive news for the debt market.

"A lot of has to with the buyer, Cycle & Carriage, It gives a lot of credibility with a 40 percent equity holding in the company now," said Cliff Huang, Asian bond strategist at IDEAglobal.com in Singapore.

Indonesia's sovereign bonds due 2006 were being quoted higher on Monday but trade was thin.

KEPCO SEES LUKEWARM RECEPTION

The new issue from South Korea's state run power company, Korea Electric Power Co (KEPCO), was bucking the stronger trend on Asian bonds though with investors finding the pricing less attractive than other recent Korean deals.

KEPCO launched a $300 million of five-year global note issue on Friday with a 8.25 percent at a price of 99.582 to yield 8.36 percent or 190 basis points over equivalent U.S. Treasuries.

The deal was reduced in size from an original $500 million but even so dealers were quoting the notes in early trade at 195 over and suggested the spread may widen further.

ChoHung Bank's new $400 million 10-year two tranche issue and Hanvit Bank's 10 year bonds were well bid.

GITIC TOLD TO SPEED UP PAYMENTS

China's Guangdong government has urged local authorities to force debtors to pay the bankrupt Guangdong International Trust and Investment Corp (GITIC), according to a China Daily report.

Municipal and county governments must "do what they could to get debtors under them to pay pack their debts", the newspaper quoted Guangdong executive vice-governor Wang Qishan as saying.

"Those who refuse to repay the GITICs debts will be seriously punished," he said.

GITIC went bankrupt in January 1999 owing debts of around $4.7 billion to some 240 domestic and foreign creditors from Hong Kong, Macao, the U.S., Japan, Thailand and Australia.

Liquidators said in October creditors could recover $928 million or some 32 percent of their debt. -Reuters