ASIA CREDIT CLOSE: New issues struggle amid weight of supply

Thu Jan 17, 2013 4:15am EST

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SINGAPORE, Jan 17 (IFR) - Asian secondary credit trading was dominated by glaring pockets of weakness in recent new issuance, with the market struggling under the weight of the recent heavy supply. Some USD4.6bn of China property issuance has been brought so far this month and so far this year around two thirds of total Asia G3 issuance has emanated from China, versus around a half for the whole of 2012.

Numerous market players are of the opinion that the issuance from PRC entities has been on the excessive side, although expect spreads to tighten further once the supply has been absorbed. The seasoned market has been relatively stable amid light flow, with the iTraxx IG index unchanged into the close at 109bp/110bp.

In the new issue space, the Champion Reit 2023s stabilised from their early week nosedive and were stable at Treasuries plus 255bp, versus last week plus 195bp reoffer. Meanwhile the new two-tranche Reg S from Yuexiu Property was a notable underperformer on its first day of secondary trading.

The 5-year tranche was out at Treasuries plus 285bp at one point and got hit there, versus a plus 255bp reoffer, while the 10-year was around 30bp wider at plus 305bp, with the bid having been as wide as 310bp earlier in the day.

Meanwhile the recently issued perps were also in the doldrums, with yesterday's pulling of a planned perp from KWG Properties not helping the perp complex. The Agile perp continued to be weighed down by selling and was last down at 95.5 from a par reoffer while yesterday's offering from Cheung Kong was down at a 97.5 bid, having opened up at 96.5.

jonathan.rogers@thomsonreuters.com

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