ASIA CREDIT CLOSE: Property bonds suffer while Indonesia grinds in

Tue Mar 18, 2014 5:01am EDT

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SINGAPORE, March 18 (IFR) - Bonds from property developers suffered amid local Chinese media reports that a property company based in Zhejiang province had defaulted on loans amounting to CNY3.5bn.

The move happened even as stocks of some of developers rallied. Shares of KWG Property Holding ended the session up 9.97% after the company reported lower gearing and stable growth in its latest earnings report.

Meanwhile, KWG's 2019 bonds closed about 25 cents weaker, quoted at 95.00/96.00.

KWG, however, was among the outperformers among Single B property bonds.

Evergrande's 2018s were the worst performing, dropping by as much as USD1 by the Asian close, quoted at 92.50/93.50. Other higher beta liquid bonds, such as Kaisa's 2018s, were down by some 50 cents on average.

"We are not trading on fundamentals here," noted a high-yield trader. "Some guys seem to be saying, 'Ok, get me out so I can buy cheaper later'," he said, adding that volumes were thin in spite of the price action.

On the investment-grade side it was different. The Asia ex-Japan IG iTraxx index ended the day about 1bp lower at 130bp mid-market.

Indonesian names were outperforming among cash bonds, with most of the sovereign and quasi-sovereign bonds quoted about USD1.5 higher since last Tuesday. Investors were cheering that Jakarta governor Joko Widodo officially entered the election for president.

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