Petronas dollar bonds fall on first day of trading
Filed Under (Other News) by Webmaster on 10-08-2009
PETROLIAM Nasional Bhd’s dollar bonds fell in their first day of trading after Malaysia’s state-owned oil company surprised investors by increasing the size of its sale by 80%.
The yield on Petronas 5.25% bonds due August 2019 widened to 165 basis points more than US government debt of similar maturity, from 162.5 on Thursday when the company sold a total of US$4.5bil of debt, the biggest dollar issue by an Asian company outside Japan this year, according to data compiled by Bloomberg.
Bond prices move inversely to yields.
“There are some mispricings out there,” Scott Bennett, head of credit at Aberdeen Asset Management Asia Ltd, which oversees US$1.2bil in fixed-income investments and bought the notes, said in an interview in Singapore yesterday.
Most investors thought the issue would be about US$2.5bil, “but US$4.5bil was a lot for the market to digest in one day.”
Petronas’s 10-year dollar bonds are trading at cheaper prices than notes of Swire Pacific Ltd, the Hong Kong office landlord and owner of Cathay Pacific Airways Ltd, the city’s biggest airline.
Swire’s first-half net income fell 74% as losses in its property division countered the carrier’s first profit since 2007, it said yesterday.
“You would have expected spreads for Petronas to narrow,” Bennett said.
“Why would a Hong Kong corporate produce a wider spread than Petronas which is net cash positive and already had US$30bil of cash on its balance sheet?”
Spreads on the Kuala Lumpur-based company’s dollar bonds will be tighter than their issue price in one to two weeks from now, he said.
Ten-year bonds sold in April 2008 by Swire, the 39.9% owner of Cathay, rated A- by Standard & Poor’s, are yielding 145 basis points above US Treasuries, Bloomberg data show.
A basis point is 0.01 percentage point.
Petronas, whose debt is also rated A-, the fourth-lowest investment grade by Standard & Poor’s, is benefiting from an oil price which has doubled since December, and a Malaysian economy showing signs of stabilisation after contracting for the first time since 2001 in the three months to March. – Bloomberg
