ASIA CREDIT CLOSE: Trading thin with China high yield in focus

SINGAPORE, Nov 1 (IFR) - Trading was thin and generally illiquid against a weaker US economic backdrop, with disappointing Chicago PMI numbers and fears that Greece is about to run out of debt service funds by the middle of the month weighing on sentiment.

Notable has been the performance of recently issued deals in the Single B and unrated spaces, which have done badly, whereas deals brought around three weeks ago and before are holding up well.

So for example, the Franshion and Regal 2017s are down at 99 and 98.50 bid apiece, while the Youzhou, Kaisa and Sunac 2017s are up at 102.25, 102 and 105 respectively. In a measure of the generally softer tone, the iTraxx 2018s IG index is 2bp wider at around 120bp mid.

According to a regional syndicate banker, much of the flow today has been centered on high-yield, with the IG segment taking a breather, perhaps understandable in the context of its recent strong spread compression.

The newly minted 2-part USD1bn trade from Soho China is underwater, although the 2022s have added an eighth to 99.875, and are up from the low print this morning of 99.25. The 2017s are down at 99.75. Both tranches were reoffered at par.

"The market has taken a rest after the recent powerful run-up and although the macro backdrop is not too auspicious, there is still money waiting to be put to work ahead of the year end, and I see no reason for a sharp reversal," said the syndicate head.

Chinese industrial names were also well bid with China Shanshui 17s quoted around 108/109. Mongolian Mining 2017s were around 102/103.

jonathan.rogers@thomsonreuters.com