SINGAPORE, May 26 (IFR) - There was little trading activity
in Asia today with both the US and UK markets closed for
Yields on Thai banks widened 5bp following a Moody's release
this morning that the military coup is credit negative for Thai
banks. The release said this is "because it [the coup] adds
pressure to already weakened investor and consumer confidence
and risk stalling loan growth and undermining asset quality".
In the first quarter of 2014, Thai bank lending grew just
1.2% quarter-on-quarter, the slowest pace since the third
quarter of 2010. Moody's expects Thai bank loan growth to be
lower than its forecast of 7%-8% before the coup, much lower
that the average increase of 13% for 2011 and 2013.
In contrast, Indonesia's longer-dated sovereign paper rose a
further 25 cents to 37.5 cents. The 2044s were indicated at
bid-117.25, up 25 cents. Pertamina's newly printed bonds also
inched up 25 cents to bid-101.25, according to a Singapore-based
In the high-yield segment, Chinese property bonds are still
being closely watched, although there was little trading.
"Investors are waiting for more stimulus policies from the
central government before taking actions," said another
Yet, a Hong Kong-based trader believes the central
government is not likely to announce any concrete loosening
measures. "Developers in certain Chinese cities with excess
supply will suffer and there is little the central government
could do. Still, demand in top-tier cities is still strong," he
Premier Li Keqiang said last week that China would fine-tune
policy when needed to solve problems, such as tight funding
conditions for the real economy, especially for small companies.
The market is still digesting Sunac China Holdings'
acquisition of a 24% stake in Greentown China Holdings announced
Greentown's 2018s, quoted at 98.5/99 today, still have not
bounced back to the par level before the rumour about the
acquisition initially came out two weeks ago. Market players
generally believe the stake sale is neutral for Greentown.
"As Sunac and Greentown have been cooperating for a long
time, there should be little operational risk," said the Hong
The stake buy is considered credit negative for Sunac,
however, as the Tianjin-based company is not in a strong
financial position to begin with. Sunac's 2018s were indicated
below the around par level when the news first leaked. They were
quoted at 98/99 this afternoon, with little trading.
Overall, investors are worried that, post acquisition,
Greentown will become operationally more aggressive as Sunac is
more managed in such a way.
Greentown chairman Song Weiping will retire as company
chairman from March 2015, while Sunac chairman Sun Hongbin will
act as co-chairman before the date and then become the sole
The lack of information on what Wharf Holdings will do with
its 24% in Greentown did not offer investors any comfort either.
"If Wharf ultimately sells its stake to Sunac, it will
definitely be credit negative for Greentown," said the Hong