ASIA CREDIT CLOSE: Asian credit fails to find value hunting after recent sell off

Mon Feb 4, 2013 4:35am EST

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SINGAPORE, Feb 4 (IFR) - Asia's credit markets retained the sour flavour left by last week's sell off in the perp and China property sectors and there was no sign of a level of support having been reached at which point value hunters look to go long.

Indeed, the Street is said to be net short of paper and happy to remain that way in the face of a skittish Treasury market and the "great rotation" which is underway out of fixed income and into equities. The iTraxx IG index is looking to close out the day at 116bp/118bp or 2bp wider.

The perp sector continues to nurse the wounds inflicted last week, with only the Petron perp spared and last holding on to end wrapped around par. The Cheung Kong perp is bid at 91, the Agiles at 92 and the Reliance at 95.

Broadly speaking the China property sector is off between 2-3 points with the China SCE and Powerlong the worst rated performers, having each shed around 4 points.

Unrated Champion Reit is a downside standout and remains 100bp back of where it priced over a fortnight ago, last printing at a Treasuries plus 290bp bid. Perhaps in a clear demonstration that heavy supply equals lower prices and that the opposite applies, the ICTSI tap is holding its own at a 101.5 bid, with South East Asian non property credit also holding up well thanks to the rarity value dynamic.

Regional offshore dollar sovereigns are tracking the US Treasury market down and the long end of the Philippines and Indonesia curves shed between a quarter to a half point during today's session.

jonathan.rogers@thomsonreuters.com

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