ASIA CREDIT CLOSE: Investors bet on debt ceiling resolution and relief rally
SINGAPORE, Oct 16 (IFR) - Asian credit investors on Wednesday were making a clear bet on a resolution to the debt ceiling issue in the United States.
Traders across the region reported clients buying high-quality investment-grade bonds and spread products, both of which would benefit from a resolution to the standoff in Washington.
"People are betting on a resolution, so the market has been pretty firm," said a trader in Singapore.
The move prompted the Asia ex-Japan iTraxx IG index to tighten by 2bp-3bp, with the last quote of the Asian session marked at 135bp/138bp.
Spreads for some of the less liquid high-grade names, such as in Thai corporate bonds, also staged a rally with the bellwether PTTEP 2018s ending the day bid at 192bp, 10bp tight to where they were trading on Monday.
More liquid recent new issues did well, with Canara Bank's new 2018s leading the charge. Canara's bonds closed the day at 367bp/364bp, compared to a reoffer spread of 385bp when the deal was priced last Thursday.
China Taiping also benefited from the positive mood and recovered to trade near its 330bp reoffer price, and was last quoted at 331bp/328bp.
Some traders also reported real money clients bottom-fishing some of the more beaten-up high-beta sovereigns too. As a result, Indonesia's 2043s closed the session at 82.00/83.00, about 25 cents higher in price terms.
Longer dates bonds from the Philippines, however, did not fare as well. While the 2037s ended slightly tighter in spread terms, they closed the day about 15 cents weaker in price.
With much of the potential gains to be made on high-grade, investors ignored the high-yield market and sub-investment-grade bonds hardly moved, ending the day unchanged amid very little trading.
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