ASIA CREDIT CLOSE: India, Indonesia underperform weak market
HONG KONG, Aug 19 (IFR) - Asian credit spreads were wider today as US Treasury yields rose on expectations that the Fed would start rolling back its monetary stimulus sooner rather than later with the US economy showing signs of further improvement.
Indian and Indonesian credits came under pressure as the countries' currencies dropped as a result of another exodus of foreign investors from riskier emerging markets and expected difficulties ahead for both nations to finance their current account deficits.
Indonesia's 5-year CDS was at 240bp/260bp, which was 15bp wider on the day. In cash bonds, the Republic of Indonesia 2023s were down USD1.25 in price terms on the day at 83.250-84.750, while the 2043s were at 74.75/76.25, down USD1.50.
Pertamina 2023s and 2043s were down USD1 at 84/86 and 75/77, respectively. PLN's 2042s were down USD2.5 at 72/74.
Indian names also underperformed with most of them 15bp-30bp wider after the currency dropped to another low in today's trade. ICICI Bank's 2018s widened to T+390bp, while Axis Bank's 2017s were at T+380bp and State Bank of India's 2018s widened to T+385bp.
The broader market, however, fared just as poorly. The Asia ex-Japan iTraxx IG index widened to 145bp/150bp after closing at 140bp mid on Friday.
Yet, traders said selling was muted around Chinese and Korean banks, which were 3bp-5bp wider.
"Volumes are low because of summer holidays and the market moves are volatile now," said a Hong Kong-based trader.
Traders were eyeing Wednesday's minutes of the last Fed meeting for hints on the stimulus scale-back before taking new positions.
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