IFR-ASIA CREDIT CLOSE: Fosun below reoffer, Hon Hai hit by Apple

Thu Jan 24, 2013 4:24am EST

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LONDON, Jan 24 (IFR) - Bonds of Hon Hai were beaten up today in secondary trading after Apple indicated slower than expected revenue growth ahead. The negative news from one of Hon Hai's most important clients put pressure on the bonds of the Taiwanese company and its 2017s traded as wide as 162bp over US Treasuries, 22bp wider than where they were being quoted yesterday. They recovered a bit toward the end of the session closing at 156bp, though.

Though Hon Hai was suffering, the market in general was ending little changed. The Asia iTraxx IG index was ending the session about 1bp wider at 107bp/109bp. Traders reported some buying in the long end of Philippines bonds, with the 2037s ending about 50ct higher and the 2031s closing some USD1 stronger in price terms. Indonesia was keeping up.

The spread between the bonds of Philippines and Indonesia has been narrowing and the 10-year of Indonesia is only some 30bp wide to Philippines, when it started the year more than 70bp wider. The same relationship is being seen in CDS as the 5-year protection for the Philippines is closing today at 100bp and Indonesia is at 136bp. Yet, in spread terms both were little changed today.

In fact, it was a fairly uneventful day according to traders. The new bonds of Qtel were among the few new issues that saw heavy trading and the 5-year was closing the Asian session up 80ct in price while the 10-year was ending almost USD2 stronger. Fosun traded up initially but was closing the session slightly below its par reoffer quoted at 99.90.

Christopher.Langner@thomsonreuters.com

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