ASIA CREDIT CLOSE: Better sellers everywhere, no buyers to be found
SINGAPORE, Aug 16 (IFR) - A selloff in the equity markets, coupled with a concurrent spike in Treasury yields, prompted Asian fixed-income investors to try and lighten up their exposures. The trouble, however, was that finding buyers became uncertain business in the market.
"People generally don't want to hold on to bonds. There are better sellers everywhere and it is hard to find buyers," said one trader in Singapore. As a result, liquidity was very thin.
Still, prices were being shifted wider on spreadsheets and the Asia ex-Japan iTraxx IG index ended the day 3bp-4bp wider last quoted at 140bp mid-market.
Indonesia was underperforming the market at large, reaffirming its position as one of the investment-grade credits with highest beta around. The long-end of the sovereign's curve was some USD1.5-USD2 weaker in price terms.
High-yield bonds were also not immune to the selling, though liquidity was even thinner for such paper. Desks were quoting the more liquid bonds with USD2-USD3 bid-ask spreads and a firm bid was as easy to find as a duck-billed platypus.
Traders were still being fairly generous with the benchmark Chinese property bonds and marking their spreadsheets to show only an average drop of 50ct in price terms. Citic Pacific was the sole underperformer.
Moody's today put the Citic Pacific Ba1 rating under review for a downgrade, which, together with the downbeat market sentiment, weighed on the company's bonds. The perps were the worst hit, quoted at 92.75/94.50, USD2 lower in price terms.
Distressed paper, was dropping heavily, too. Bonds from coal trader Winsway, for instance, had found a bid earlier in the week and traded in the high 30s after having touched 25.00/27.00 the week before. As investors lightened up on risk, though, those bonds were back near 30.00.
Another distressed name that took a beating was Mongolian Mining Corp. The company's 2017 bonds had traded near 60.00 recently, but were last quoted at 53.00/56.00 after the Moody's downgrade yesterday to Caa1 from B3.
The rating agency said that it expected MMC to have less than USD90m in cash on hand at the end of fiscal 2013, while it had some USD277m in debt and interest payments to meet next year.
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