Asian market relatively flat; Rio Tinto raises $2 billion in corporate bonds
City Index September 15, 2011 3:35 PM
<p>Asian markets were mixed again today, disappointing when taken in the context of weekly performance. The MSCI Asia Pacific Index added 0.7% at late afternoon […]</p>
Asian markets were mixed again today, disappointing when taken in the context of weekly performance. The MSCI Asia Pacific Index added 0.7% at late afternoon Tokyo trading, after earlier gaining as much as 1.6%.
Standard & Poor’s 500 Index futures slid 0.3%, indicating the U.S. stocks gauge may halt a three-day rally. Markets are still uneasy about European developments and traders are unwilling to hold any unnecessary positions.
Australian corporate news was dominated by Myer – an iconic Australian department store operator – which exceeded market expectations but hosed down future expectations. When digging under the bonnet, sales continue to decline and earnings are largely driven by cost management – a strategy which is not sustainable over the medium-long term in retail. Comparable sales were 7.9% down in the fourth quarter, echoing similar trends among other discretionary retailers in Australia.
Despite all the market turmoil, resource giant Rio Tinto managed to raise US$2bn at very favourable rates in the corporate bond market. Rio Tinto priced 5 year notes at 2.25%, 10 year notes at 3.75% and 30 year notes at 5.20%. The margin over treasuries shows there is appetite for high quality corporate debt, a positive for other large caps looking at raising money in the same market.
All eyes are on Europe again tonight with key developments, particularly around Italian bonds, to be watched closely. A Greek default is by now priced and accepted as a near certainty.
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