While share buybacks might be a focus for some investors, John Stover, Portfolio Manager of Tribeca Asia Credit Strategy, points to bond buybacks as a big opportunity.
You’d be hard-pressed to find an Australian investor unaware of the power of a share buyback, particularly in the current reporting season. The concept of bond buybacks? Far from front of mind – yet this area of the market has the potential to be lucrative.
Bond buybacks refer to companies buying back their own bonds – and with the market the cheapest it had ever been only 18 months back, it was a popular strategy across Asia, particularly India, Southeast Asia and China, while Japan and Australia got into the action too.
Some examples include Adani Ports and Special Economic Zone’s buyback of up to $130m of senior debt last year or New World Development’s $610.3m buyback of its dollar bonds in December 2023.
It’s a key focus area for John Stover, portfolio manager for the Tribeca Asian Credit Fund, for the coming year, viewing it as potentially a major source for outperformance.
“What we’ve been focused on over the past 12-18 months is getting in front of some of those buybacks, because those buybacks can move the market price of the bond up by 5,10,15 points, and we’ve seen that across the region,” says Stover.
In this episode of The Pitch with Livewire Markets, Stover discusses how to profit from event-driven and special situations across Asia – with an eye to the value of bond buybacks.
Read here: Why bond buybacks across Asia-Pacific should be on your radar