Philippine bonds rise on debt swap plan

Philippine bonds gained in a weak market on Friday after a government official said Manila was planning a debt swap to cut funding costs. The broad market was jittery ahead of US monthly employment report amid growing expectations of monetary tightening globally.
On Thursday, Bank of England hiked rates to a six-year high and European Central Bank President Jean-Claude Trichet indicated expectations that interest rates will rise were still valid. "There's no conviction! We saw manic buying yesterday and they are all nervous today," said a Hong Kong trader. "We have another wave of data tonight and there is still the issue of leveraged loan supply and how that filters through."
After strong US jobs and service data on Thursday, bond markets have to face the possibility of a robust outcome in Friday's non-farm payrolls report, which could push debt prices down further.
Benchmark 2033 bonds from conglomerate Hutchison Whampoa eased to trade at 145/142 basis points (bps) above US Treasuries, wider by 3 bps. But bonds from Manila rose after Finance Under-secretary Roberto Tan said the government was considering the sale of new domestic debt in exchange for existing issues. The move would increase liquidity of most popular maturities, making them more attractive to investors.
Benchmark bonds from the Philippines due in 2032 traded at 96.375/96.75 cents to a dollar and the 2031 bonds traded at 110.375/110.625. On Wednesday they were bid at 96.625 and 110.75 respectively.
Philippine 5-year credit default swaps - insurance-like contracts that offer protection against defaults and restructuring - were steady at 110 bps. Some analysts say the government could be considering a swap of dollar-denominated bonds as well. "I think they may buy back the 2007 bonds, which are maturing in September this year," said a Singapore-based trader.
"They are looking to find ways to issue without doing any net additional issuance and this will be quite useful to them in light of their fiscal slippage," he said.
China Properties Group Ltd bonds due in 2014 UN fell 2.5 points to 94.25 cents to a dollar after the company announced the resignation of Lam Hin Chi, its qualified accountant and company secretary.
China Glass Holdings Ltd's newly sold five-year bonds were trading at 99.25/100 cents to a dollar after the company sold them at par to yield 9.625 percent. The $100 million offering received orders of $160 million. Region-wise Asia took 65 percent of the deal, Europe accounted for 30 percent and the Middle East 5 percent.