ASIA CREDIT CLOSE: New Issues rally, but Sinochem slips

Wed Apr 23, 2014 5:41am EDT

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Singapore, Apr 23 (IFR) - Credit markets in the region were all about new issues today after five with a total value of USD4.2bn were priced yesterday. This puts the combined size of Asian primary deals at USD50.4bn, half of the USD105bn analysts had projected for the full year.

Bankers and credit analysts expect more issues this month before the summer holidays, but at least one analyst laments that corporate issuers have stayed away so far this year. Stripped of bank and sovereign offerings, issuance from companies to date is half of that for the same period last year.

Investors were not complaining. Banks and sovereigns were absent last year, but they are back in this first half to lock in rates before benchmark levels start to climb in the second half.

Having under-invested earlier in the year, investors were out in force to pick up fresh supplies, leading to a tightening of some 4bp-5bp in most new bonds.

Tencent's newly priced 2019s were 4bp tighter from the reoffer spread of 165bp over US Treasuries, but its less popular 2017s were flat at the reoffer spread of 115bp, and less trading was seen, said one credit analyst. A banker, however, said the 2017s had tightened to 101bp/96bp.

Both tranches are expected to be traded more actively in the US markets, given that investors there were the biggest buyers of the bonds. Traders expect the brisk trade in the bonds to continue over the next few days.

Korea Expressway 2017s opened 2bp tighter after pricing at 80bp last night, but, come mid-afternoon, quotes of 72bp were heard. "As the bonds look cheap to their curve, it's no surprise investors are buying," said one analyst.

Union Bank of India also priced its 5.5-year bonds yesterday at 280bp over US Treasuries and they rallied 5bp tighter.

Sinochem's new 2019 bonds was the exception as they opened weaker, pushing past its reoffer spread of 155bp to 160bp before recouping losses later in the afternoon. It was quoted at 156bp in mid-afternoon.

Kasikornbank was the fifth issuer yesterday, pricing its 5.5-year bonds at 185bp, where they remained during the course of the day. The paper was last indicated at 185bp/183bp. Siam Commercial Bank's 2019s tightened significantly to 172bp/169bp after pricing at 180bp on April 2.

Traders expect the Kasikorn notes to tighten as well, as there is scarcity of paper from South-East Asia and investors are quite eager to diversify into the region whenever possible.

Other issues that had priced in recent weeks are also having a good run. Poly Real Estate 2019s have rallied some 10bp from reoffer, and were quoted at 365bp, while MIE 5NC3 bonds, priced at 98.98 to yield 7.75% last week, have gone up 1.5 points since.

The only laggard happens to be a high-yield name - Sri Rejeki's 2019s, which priced at par last week. The bonds are quoted 99/100.

With all attention focused on the new issues, credit spreads hardly moved. The Asia IG index was indicated at 121bp/123bp, mostly unchanged from yesterday.

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