ASIA CREDIT CLOSE: Deep illiquidity due to Asia and US holidays
SINGAPORE, Oct 14 (IFR) - Trading was extremely thin during the Asia session in secondary credit due to public holidays today in the US, Japan and Hong Kong.
A trader at a Singapore-based European bank said that not even scraps of paper had traded today. The iTraxx IG index is looking to close out unchanged at 140bp/142bp in a measure of the profound illiquidity.
A stronger Friday US session on the back of a presumed agreement between Republicans and the Obama administration might prove to have been wishful thinking, with no deal yet on the table ahead of Thursday's looming US government debt default. Still, a deal of some kind is widely expected to be cut before then.
It's notable that the iTraxx Main index finished on Friday at 93bp, its tightest in over three years. Asia IG credit looks relatively cheaper using the iTraxx Asia index as a proxy for the asset class, with the index having failed to reach the tights of the year after its May sell-off.
"Asian credit still looks relatively cheap and barring any stupid decision on the debt ceiling, I would expect primary issuance to be on the radar screen for many investors once the holiday break are over.
If there is a measure of macro stability, the pace of issuance seen last week [where USD5.4bn of Asia US dollar primary deals printed] is likely to resume," said the trader.
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