ASIA CREDIT CLOSE: Spreads tighten; Indian lenders lag
HONG KONG, March 19 (IFR) - Asian credits bounced back from Monday's lows, but spreads on Indian lenders widened after a key government ally withdrew support from the coalition.
The Itraxx IG Index tightened to around 101.5bp/105bp over yesterday's closing level of 107bp.
"Yesterday, there was an overreaction. As overnight US stocks didn't fare too badly, the overall sentiment is better," said a Singapore-based trader.
Korean banks were among those that benefited the most as they tightened 3bp-5bp. The Industrial Bank of Korea 2016s were about 5bp tighter at T+125bp/115bp, while KDB 17s were also tighter at T+90bp/80bp.
Chinese bank-guaranteed paper like Cosco Finance's 2022s tightened a couple of basis points to T+194bp, while Hainan Airlines' 2020 bonds were at T+136bp.
Traders said the market was quite active with good two-way flows today. Participation was mixed with real money and PBs. Still, there was preference towards buying at the belly of the curve in the 5-year segment in a sign of aversion to duration risk.
The underperformers were the bonds of Indian lenders. Traders said Bank of India and HDFC Bank 2018s traded 3bp-5bp wider after the new IDBI Bank deal was announced at T+315bp for a 5-year 10-mnth bond. The withdrawal of a key ally from the Indian governing coalition also added to the weakness.
Chinese property names were also well bid with prices broadly up a quarter point across the curve.
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