UK GOVERNMENT bonds shrugged off strong US manufacturing data to bounce off the bottom end of their recent trading range.
With gilts having followed international markets lower on the view that the current cycle of monetary easing has run its course, the release of further data suggesting a rebound in the US economy was seen to have been already priced into the market.
That means that gilt investors took in their stride yesterday’s release of figures showing a 1.7 per cent jump in US factory orders in June. The September gilt future rose 38p to £119.15, with Treasury 8 per cent 2021 up 148p at £140.30.
Xstrata, the Swiss coal and zinc miner, enlivened the corporate primary market with a $600 million (£370 million) convertible bond issue through JP Morgan and Deutsche Bank. The bonds, maturing in 2010, convert at 610p a share and bear a coupon of 3.95 per cent, against a yield on the shares of 2.85 per cent. Xstrata, which recently bought MIM Holdings of Australia, is using the issue to cut borrowing costs.
Elsewhere, SABMiller, fresh from acquiring Italy’s Peroni, said it would raise $2 billion through the issue of debt securities. The world’s second largest beer maker said about $1.7 million of the securities would be offered by its Miller Brewing subsidiary, with the balance from SABMiller.