ASIA CREDIT CLOSE: China PMI prompts round of profit-taking

Thu Feb 20, 2014 4:26am EST

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HONG KONG, Feb 20 (IFR) - A weaker-than-expected manufacturing number from China this morning prompted a round of profit-taking in Asia credit markets, and most of the bonds in the region ended wider.

"The market was consolidating a bit today," said a trader in Singapore.

The move was especially pronounced on the CDS front as investors bought protection, especially against a default in China. The 5-year credit default swap for China ended the session at 91bp/92bp, after closing yesterday at 88bp.

That helped push the Asia ex-Japan iTraxx IG index some 4bp wider on the day to end at 139bp/140bp.

As usual, the high-grade market was immune to the selling momentum, and bonds from Malaysia, Singapore and Korea ended the day unchanged in spread terms.

The new issues mostly performed well, too. The new Beijing Energy bonds, backed by a standby letter of credit from the Agricultural Bank of China, gained more than 10bp to close quoted at 244bp/243bp over the 2-year US Treasury.

The new IRFC bonds were also performing well closing 5bp tighter in the session quoted at 235bp/234bp.

High-yield bonds, however, also saw some profit-taking, with one account hitting bids on Shimao's 2021s at 101.00 and pushing the bond quotes some 25 cents lower.

Christopher.Langner@thomsonreuters.com

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