ASIA CREDIT CLOSE: Spreads tighten after sell-off in treasuries

Thu Jul 31, 2014 5:02am EDT

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SINGAPORE, July 31 (IFR) - Spreads on Asian credits generally tightened 2bp-3bp today after yields on US Treasuries rose overnight.

During Asian hours, 10-year Treasuries were flat at around 2.54%. Argentina's technical default had a minimal impact on the Asian credit markets as the strong US GDP numbers negated the news.

"The news [about Argentina] would have an impact in any other period, but, now, the sentiment is very strong. So, Argentina is viewed as an isolated case," said an emerging-market sovereign bond trader.

Spreads on both Indonesian and Philippine sovereign paper tightened 3bp-5bp across the curve. "Many investors are still waiting on the sidelines before the [release of] US non-farm numbers tomorrow," he said.

Investment-grade paper saw healthy two-way trading with real money loading up low-beta credits and retail seeking high-beta bonds, another trader said.

Chexim bonds continued to draw interest with the 2019s being indicated tighter at 90bp/87 over Treasuries. Sino-Ocean Land's bonds, issued last week, also traded well with its 2019s being quoted at a spread of 300bp/297bp and 2024s at 343bp/338bp.

In the high-yield segment, prices were largely unchanged today with a few names taking a hit from China's anti-corruption investigations.

Fantasia saw its 2017s 2019s and 2020s retreat 2 points on real money and private bank selling after local media reported its top management could be involved in a high-profile investigation into Zhou Yongkang, former security chief of China.

Evergrande Real Estate bonds also took a hit on reports that its chairman may be involved in an anti-corruption investigation into the mayor of Guangzhou City.

Evergrande bonds were half a point lower across the curve. Its 2015s were bid at 5.4%, the 16s at 8.3% and the 18s at 9.2%.

Lianting.tu@thomsonreuters.com

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