ASIA CREDIT CLOSE: Cash bonds outperform credit spreads as new issues gain
SINGAPORE, Sept 17 (IFR) - The froth seen in yesterday's rally was not there today as Asian markets turned cautious ahead of the FOMC meeting, starting today in the US and finishes tomorrow.
Asian stocks took a fall across the region with the Nikkei down 0.65% and the Kospi in the negative at 0.4%.
Asian credits widened in sympathy, with the IG quoted at 131bp/133bp in the afternoon, having widened some 2bp from yesterday's close. Europe's tepid opening did not help either with the main index a touch wider and the crossover flat.
If the investors were not paying attention to the credit spreads, it was only because new issuance continued to dominate the secondary markets.
New supplies of high-yield paper came to the fore as buyers were out in force in yesterday's more positive environment. Greentown compressed guidance 50bp to a final pricing of 8% on its 2019s and still garnered a final book of USD5.5bn.
A strong bid was still seen in today's secondary markets, with the bonds bouncing up to 100.75/101.00. Greentown 2018s was pulled up as well, with levels quoted at 103.5/104.5.
The new high-yield bond from National Savings Bank has continued to rally after pricing at par last week. The notes are trading at 101.00/101.75.
The healthy results lured another high-yield issuer out today, with Wuzhou guiding a US dollar 5-year non-call 3 at a high 13%, possibly one of the highest-yielding issues in a long time. Traders said the deal had minimal impact on the sector.
"There are not that many trades today and the high-yield sector is moving sideways," said one trader. "Everyone will wait to see what the FOMC has in store."
In the sovereign segment, Indonesia's move to pay generously to secure a USD1bn sukuk due 2019 has paid off handsomely as the paper moved further northwards at 102.00/102.50, after pricing at par last week.
In high grade, strong demand for Korean paper has pushed out a few names to the primary market as KoGas eyes an euro-denominated issue and Korean Western Power hires banks for a potential US dollar issue.
Some supply fatigue seems to be setting in, though, as Kexim's new 2018s were quoted at 128bp/125bp, flat to slightly wide to the reoffer spread of 125bp.
Demand for Indian paper is also healthy, pulling ICICI's 2018s in to 337bp/310bp and SBI's 2017s to 260bp/240bp. ICICI 2018s were quoted as wide as 385bp/365bp back in September.
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