HONG KONG, October 29 (IFR) - The main event of the Asian
trading day was Moody's upgrading the Republic of the
Philippines to one notch below investment grade at Ba1. The news
pushed up the sovereign's offshore dollar bonds by between 25
cents and 50 cents and pulled in the Philippines' CDS by
The agency cited the country's rising growth, low inflation,
appreciating currency and growing foreign exchange reserves as
the reason for its action.
The move had long been anticipated by market players, which
explains the relatively muted price action, although it paves
the way for the attainment of full IG status and will certainly
add to the allure of Philippines' debt, which has always carried
rarity value given the relative lack of issuance from the
country in relation to its Asian EM peers.
Bonds issued earlier in the year by Yanzhou Coal took
another hit after the company failed to meet earnings estimates.
The company's due 2017s and due 2022s are each off around
USD2 and USD3 dollars versus last Thursday's levels.
Meanwhile the China property sector has shown signs of
weakness as it contemplates absorbing new issue supply from Soho
China, with the China property cash complex about 50 cents to
USD1 weaker across the curve.
The iTraxx series 18 IG index is 5bp wider on the day,
having opened 4bp softer, and is closing out at 123bp/125bp.
Cash is broadly speaking around 3bp-5bp wider, with a regional
syndicate banker suggesting that after the recent powerful
tightening, there was a recalibration of spreads underway,
although in the absence of widespread selling from real money or
All in all it was an illiquid trading day, with the
underwhelming US GDP data released last Friday failing to make a
major impact on sentiment and all eyes now on Friday's NFP data
for setting the short term tone.