ASIA CREDIT CLOSE: Market recovers as bulls bet on better NFP
SINGAPORE, Dec 6 (IFR) - Asian credit markets recovered some recent losses as accounts squared up positions ahead of tonight's non-farm payroll numbers in the US.
Bulls were pushing bonds higher and some of the accounts that had started to short the market reduced positions for fear that the all-important employment number would surprise on the downside.
"It is all about being on the right side of the trade," said a trader in Singapore.
The move helped the Asia ex-Japan iTraxx IG tighten 1bp to close at 135bp-137bp, still some 5bp-6bp wider than where it was last week, but better than yesterday's close.
In cash, most of the movement happened in the more liquid bonds, especially of Chinese state-owned entities, which have become the instruments of choice to bet on for the direction of the market.
As a result, the new 2023s of bellwether Sinopec were closing at 165bp/162bp, having traded as wide as 168bp earlier in the week.
New issues were also catching a bid and the new 5-year bond China Merchants Land printed on Wednesday was closing the day at 260bp, flat to the reoffer spread. The bond had traded as wide as 270bp yesterday as investors reduced exposure to emerging-market credits.
Perhaps, part of the feel-good sentiment was attributable to the better-than-expected fund flow numbers. EM-dedicated bond funds received USD1.52bn in new money during the week ended December 4, according to EPFR
In a research note, ING noted that this was the first net inflow since the USD570m received in the week of September 25 and the highest amount that went into EM-dedicated bond funds since May.
New issues printed last night had an assist from the better sentiment and the new 3-year bonds of China State Shipbuilding Corp tightened about 2bp to close quoted at 253bp/250bp over the 2-year US Treasury.
The new USD800m 5-year bonds of Baosteel also ended tighter, quoted at 242bp/239bp, versus a reoffer spread of 245bp.
The best performer of this week's new issues, however, has been Pacnet. The 5-year USD350m 9% bonds closed at 102.25 having priced at par on Wednesday.
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