ASIA CREDIT CLOSE: New issues rally, overshadow rangebound spreads

SINGAPORE, Jan 23 (IFR) - Asian new bonds were firm amid a positive tone but credit spreads were moving sideways with no new catalyst to point to a clear direction. The iTraxx IG index was quoted at 106bp/108bp today, as it was on Monday.

The spreads have been flat and rangebound in the past few days with market players turning their full attention to the slew of new bonds being priced.

The markets showed no hesitation in absorbing a total of USD2bn of new bonds that priced last night, although the four new issues gained at varying pace in the benign environment. This was helped by a lack of new deals today, other than Fosun's offering of a 7NC4 Reg S and the DBA Comm Reg S that was brought over from yesterday.

In the IG space, Sime Darby's new sukuk were continuing to enjoy a strong bid in the market following a USD8.7bn book on its five and 10-year notes. The 5-year gained to UST+122/118bp and yielding 100.25/100.50 after pricing at par, and is still hovering around these levels, inside the issue price of 130bp.

The 10-year rallied more strongly to 131/127bp after opening 10bp tighter from the issue price of 145bp, with a yield now quoted at 101.25/101.50.

Shinhan Bank's new 2018s put in a less sterling performance in the morning at 127/124bp against the issue spread of 127.5bp, but this tightened further in the afternoon to 124/121bp.

The fresh supply of Chinese paper did just as well, with both Longfor 2023s and Hengdeli 2018s moving up to 100.50/100.75 and 100.5/100.875, respectively.

With the new bonds performing better than expected, fears of indigestion, which dented secondary markets just a week ago, are fast receding. A total of USD15.1bn of deals from Asia have priced so far in January - a record for the months of January, and close to the monthly record of USD16.3bn that were done in September last year, noted an ANZ credit report.

kityin.boey@thomsonreuters.com