ASIA CREDIT CLOSE: Dealers add risk ahead of FOMC
SINGAPORE, Sept 18 (IFR) - Asian credit markets were closing the session firmer as dealers covered shorts and added risk ahead of the monetary policy decision of the FOMC in the US.
Traders said there was not a lot a of client flow, but there was a general trend to add duration in a sign that brokers and hedge funds were betting US Treasuries could extend the recent rally.
Higher-beta names, such as Indonesia and its state-owned companies, were better bid and the 2019 sovereign-issued sukuk bonds were last quoted at 102.75, having priced at par just last week.
The 30-year bonds of state-owned utility PLN were also finding strong demand and were quoted some USD3 higher in price terms. "A lot of guys are covering shorts, but people are also extending duration," said a trader in Singapore.
Another trader said Hutchison 2019s, which recently were only seeing sellers, were in strong demand with the last bid at 199bp, some 5bp tighter in the week.
The move spilled over to CDS and the Asia iTraxx ex-Japan IG Index ended the day some 3bp tighter at 129bp/130bp.
As dealers bet on a risk rally tomorrow, they also added some exposure to lower-rated credits and the Chinese property issues were up 25ct-50ct on average.
The strong bid for Indonesia was also buoying some of the high-yield credits from the countries, prompting trades on Indosat at 105.75, 50ct higher in price terms today, and even the Bumi 2016s, which were last quoted at 68.05/70.50, more than USD5 higher in price from a few weeks ago.
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