SINGAPORE, Jan 6 (IFR) - The first trading session of the
year to see primary activity is closing with institutional
investors and hedge funds seeing things differently.
Fast money was reported to be buying CDS today, especially
those related China and Thailand, to take advantage of upcoming
supply from the former and talk of a downgrade for the latter.
Meanwhile, institutional accounts were buying cash bonds,
betting on tighter spreads as they returned to their desks to
find the yield on the 10-year US Treasury 11bp higher than it
was right before Christmas.
As a result, the Asia ex-Japan iTraxx IG Index was closing
the session quoted at 134bp, or 3bp wider on the day. That move
was attributable mostly to a similar widening in the 5-year CDS
of both Thailand and China.
On the flip side, traders reported that spreads on cash
bonds were v2bp tighter on average.
"I only got lifted today," said one trader, indicating his
offers went to investors in a sign of strong demand for bonds.
There were buyers of Korean paper, despite widespread
expectations that the KDB could tap the market this week and be
followed closely with the likes of Kexim, KNOC and Korgas.
Although the activity was setting a trend, traders reported
very little actual trading. "Most accounts were busy with the
new issues," said another trader.
There were three live deals in the market today, all in the
high-yield segment. Chinese property companies R&F Properties
and Kaisa Property Holdings were both in the market, as was Sri
Lanka with a new 5-year dollar benchmark.