SINGAPORE, July 7 (IFR) - Indonesia sovereign bonds rose 12.5 to 25 cents today on optimism that Joko “Jokowi” Widodo could win the election on Wednesday.
Indonesia’s main stock index also got a lift, advancing 1.5% today to 4,977. Widodo, who has been favoured by financial markets in the tight election, got a boost of support after a nationally broadcast public debate over the weekend.
“Investors are positioning for a win for Jokowi, but they are not going all in because if he didn’t win, the liquidity will dry up considerably,” a Singapore-based trader said.
Some dealers are getting in on the long end of the curve instead of betting on a particular winner. “One has to be defensive in this situation,” the trader said.
Overall, spreads for Asian investment grade credits are unchanged or 1-2bps tighter in thin trading because of the US holiday on Friday.
“The Asian market is looking to take cues from the US,” a Hong Kong-based trader said.
China oil names were sought after today for their low-beta nature, a Singapore-based trader said. Temasek’s 2023s also drew interest, she added.
In the high-yield space, sentiment continued to be firm with property names up about 25 cents.
“Investors are looking for laggards such as Logan Property and Shui On Land,” a Singapore-based trader said.
Logan’s new paper was indicated at 102.25/102.75. Shui On’s 2018s were bid up at 101.25/101.75 and its US dollar perpetual was at 103/103.625.
With positive economic data from both China and the US, traders don’t expect a near-term sell-off for the sector. “[The Chinese property sector] should be okay for the rest of the summer,” the trader said.
To take advantage of the rising sentiment, a few small developers may be preparing to tap the market, including Redco Properties Group, Future Land Development and Modern Land.