ASIA CREDIT CLOSE: New Issues in high demand
HONG KONG, July 25 (IFR) - Strong demand for new issues buoyed Asian credit markets today as investors continued to chase higher-yielding bonds.
A surge in new issues from India and a rare deal from the Export-Import Bank of China propelled issuance in Asia, excluding Japan and Australia, to around USD130bn this year, about a third higher than the same period last year.
The new Chexim USD1.5bn 10-year bonds, which priced at 120bp over US Treasuries, tightened as much as 11bp in Asian trade before settling in 8bp tighter. The Chexim USD1.5bn 5-year bonds, which priced at 90bp over Treasuries, were quoted near par.
The performance of new issues from India was a mixed bag. Private bank bids for Tata Steel's USD500m 5.5-year bonds boosted the cash price to 100.55/100.70, although the 10-year tranche saw a more muted response and traded around 99.85.
The 10-year bonds priced to yield 5.95%, which was inside initial guidance in the 6.25% area.
"The 10-year looked a bit tight," according to a Singapore-based trader. "The curve differential between those two bonds is around 60bp, but that was viewed to be a bit tight compared to the Vedanta 2023s."
The trader added that expectations of additional supply in the coming weeks will leave real-money investors and private banks buying Indian paper in moderate sizes. He added that liquidity on Indian paper has improved.
"Even though there are headlines in Portugal and Gaza, we were covering our shorts," added the trader. "India is not going to sell off."
GCX's USD350m 5 non-call 2s also rose in secondaries to 101.75 on a cash price basis.
Indonesia's sovereign bonds remained unchanged after Prabowo Subianto said he will challenge the results that declared Joko Widodo the winner of the country's presidential elections.
The Indonesian 2024s were spotted at 113/113.75, while the 2044s were seen around 119.875/120.
"Now that the political news is subsiding, investors are bringing the focus back to Indonesian fundamentals," said another Singapore-based trader.