HONG KONG, Jan 7 (IFR) - Asian credit spreads were largely
steady Tuesday with trading focussed on around new issues and
investors cautious due to the uncertainty over rates and
expectations of heavy bond supply.
The Asia ex-Japan iTraxx index was trading around 134.50bp,
steady at yesterday's level.
Supply in the G3 bond market took off quickly with three
issues totalling USD2.25bn priced yesterday. Even though the
bonds priced smoothly, their secondary market performances were
just satisfactory, traders said.
The bonds of Sri Lanka, Guangzhou R&F Properties and Kaisa
Group Holdings were all trading slightly above reoffer levels.
This morning, Indonesia announced issues at tenors of 10 and
30 year, prompting some selling in the existing bonds as the new
deals offered a premium. Indonesia's 2023s were trading down at
96.50 or a yield to maturity of 5.85% while the 2043s were down
at 75.50, or a yield of 6.50%.
The constant supply of Chinese property paper was a drag on
the sector. Following the two deals yesterday, KWG Properties
today began marketing a 5NC3 issue at price talk of 9.25% area.
KWG Properties' own 2020s were down 50 cents at USD97-USD98,
Country Garden's 2023s were down 50 cents at USD94.25/USD95.25
and Kaisa 2020s were down 50 cents at USD101/USD102.
Kexim and KDB bonds also widened 2bp-3bp after the former's
announcement of a new deal.
There was two-way flow today, according to one trader, who
saw today's market as "tricky".
"Interesting that Asians are reducing duration exposure just
after Treasuries saw an overnight rally - they clearly believe
the rally will be short-lived," he said.
Chinese retailer Golden Eagle's 10-year bonds widened 15bp.
The market also saw better sellers of Indian and Thai bonds.
Traders were eyeing Friday's non-farm payrolls data for cues
on the pace at which the US Federal Reserve would unwind