Fraud fears, rumbles in the Chinese property market and oil and elections in Argentina are top of mind for block bond traders, reports market operator Liquidnet, as they look to capitalise on volatility, remain cognisant of contagion and hunt for yield.
French telecoms multinational Altice has suspended another executive as part of a wider corruption probe, causing bonds to plummet, Liquidnet head of fixed income sales, Dan Hinxman notes.
“As a result, we have seen significant block activity in the past 24 hours as pressure mounts on the business and bid / offers widen, with some investors looking for the exit and others look to take advantage of the volatility,” he says.
The Chinese property market continues to be a focus for fixed income traders, Hinxman says, following recent threats of default from behemoth Dalian Wanda. Attention is now on Sino Ocean Group – another large Chinese property developer – with investors questioning whether they could be next to waiver on repayments.
“As a result, the firm’s bond prices have tumbled, trading at 10 cents to the dollar – sounding alarm bells among investors who have been quick to offload large blocks,” says Hinxman. “Desks will be keeping a close eye on the Chinese property market, as a potential flashpoint if contagion spreads.”
In Argentina, oil company YPF’s bonds have been buoyed by plans to tap into Vaca Murta – the largest oil basin in South America – and the prospect of a general election in October.
“These favourable political and economic conditions, as the country looks to become a net exporter of energy, is tantalising the bond market – driving a rally as investors hunt for yield in a challenging market,” explains Hinxman.
©Markets Media Europe 2023
