ASIA CREDIT CLOSE: Credits rebound strongly from Friday sell-off

Mon Aug 11, 2014 5:51am EDT

HONG KONG, August 11 (IFR) - There was a strong rebound in secondary trading today after panic selling on Friday.

Spreads on investment-grade bonds rallied 5bp-10bp today on stronger sentiment. Asia ex-Japan IG iTraxx also tightened 5bp-7bp to 107bp/109bp.

"There was buying across the board today as Friday's panic was overdone," said a Singapore-based trader. The Asian iTraxx widened 4bp on Friday amid geopolitical concerns.

The geopolitical situation also eased today with news at the weekend that Russian defence ministry had confirmed the end of military exercises on the eastern Ukraine border.

Shanghai Electric Group's freshly printed bonds tightened 10bp to 130bp/125bp over US Treasuries. China Merchants Bank Leasing's bonds also saw tightening of 7bp to 171bp/168bp. Spreads on both tranches of Kexim's paper printed last week were 8bp tighter.

In the high-yield segment, buying by private banks and funds, coupled with short covering, boosted the market with cash prices indicated 25-50 cents higher across the board.

China property paper saw renewed buying on news today that Fujian Province has become the latest province to loosen restrictions on home-buying. The provincial government has also required banks to provide more credit to property developers, besides providing tax incentives for property purchases, effective August 1.

Meanwhile, Berau Coal's 2017s dropped 1 point today to 95.75 mid-market to yield 9.12%. This was partially due to the higher-than-expected price talk on the new 5-year non-call 3 paper the Indonesian coal miner will issue to refinance its USD450m 2015s.

"The market was expected an IPG of 9.5%," a second Singapore-based trader said.

Lianting.tu@thomsonreuters.com

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