ASIA CREDIT CLOSE: Weak sentiment, supply weigh on spreads
HONG KONG, Sept 24 (IFR) - Asian credit spreads widened on Tuesday as the softer tone in risky assets as well as profit taking in new issues weighed on the market.
The Asia iTraxx IG Index was closing out at 151/153.50, wider from 145bp/147bp at close yesterday.
Indian bank bonds underperformed after Moody's downgraded the senior unsecured debt and local currency deposit ratings of State Bank of India to Baa3 from Baa2.
State Bank of India's 2017s and 2018s were at T+280/T+260 and T+290/T+275 respectively. Those bonds widened from around T+265bp levels that were seen yesterday.
Bank of Baroda 2016s traded wider at T+380/T+361, Bank of India 2021s were at T+325/T+310. ONGC 2023s also widened to T+350/T+330bp and Bharti 23s also fell to 90.75.
"The market is defensive and new issues are coming which is causing some backing up in new issues," said a Singapore-based trader.
GS Caltex' new 5-year bonds had tightened to T+186bp/181bp on break this morning but profit taking bought them back to T+189bp/T+187bp in the afternoon which is close to the issue price of T+190bp. The USD400m deal priced yesterday 25bp tight to initial guidance amid USD2.6bn in demand.
KDB 19s and Kexim 18s widened to T+149bp and T+130bp respectively as well, partly in response to a new 5-year bond by Woori Bank, being marketed at T+175bp. Bangkok Bank is also selling new 5-year and 10-year bonds today at T+205bp and T+250bp respectively.
High yield did not fare much better. Five-year bonds were down 25ct-50ct on the day while those with tenors longer than 7-year tenors were down USD1 in price terms.
Bonds from Bumi Resources, Hidili and Mongolia Mining were down USD1-USD2 after a report from Moody's showed that coal miners faced liquidity concerns.
"Winsway's liquidity will remain strained, even after its proposed debt exchange, which constituted a distressed debt exchange and a default. Mongolia Mining Corp, Hidili and Bumi Resources have inadequate liquidity and significant refinancing risk over the next 12 months," the report said.
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