ASIA CREDIT CLOSE: Investors sell Indian banks after damning report

SINGAPORE, March 14 (IFR) - Traders were busy this afternoon executing sell orders on Indian lenders due to the knee-jerk reaction of investors to an overhyped local report that money laundering was widespread among banks.

While one hedge fund manager was sceptical about the credibility of the report, the effects were felt in the bond market. Five-year bonds from Indian lenders were 5bp-7bp wider at the close after having touched some of the tightest spreads in over a year earlier in the week.

Partly because of that, a new 5.5-year bond on offer from Bank of India received lukewarm response and the issuer held the guidance at its initial level of 185bp over US Treasuries.

Apart from the activity in the Indian FIG universe, there was little to write home about. The Asia ex-Japan iTraxx Index closed about 2bp wider at 104bp.

Generally, investment grade was unchanged to 2bp wider, although one trader said there were only a few scraps crossing the screen.

The only significant trading happened on Noble's new 5-year bond, but that was also hardly positive. The bonds traded up early in the morning, but soon widened to end the day at 292bp after pricing at 290bp yesterday.

The high-yield new issues, meanwhile, were doing better. Glorious Properties 2017s ended the day quoted at par, at the reoffer price at which the issuer tapped the bonds yesterday.

Kaisa's new 5-year bond held steady at 101.50, in line with the level at which they closed yesterday and still USD1.5 stronger than the reoffer print.

Christopher.Langner@thomsonreuters.com