SINGAPORE, Jan 27 (IFR) - There was a sea of red in both the
equity and credit markets in Asia as investors sold off risky
assets for safe-haven bids.
Stocks in Japan closed more than 2% lower, while those in
China, Hong Kong and Singapore were trading more than 1% down.
The iTraxx Asia IG Index was about 2bp wider, recovering a
touch from a 3bp widening in the morning. Indonesia's 5-year CDS
pushed out 5bp and the Philippines CDS were 3bp wider.
The cash bonds of the two sovereigns were also not faring
well. Indonesia's 2024s slumped to 101.40/101.70 from above 103
in the middle of last week, while the 2044s were at 99.70/100
from 102.5 last Wednesday.
The Philippines' new 2024s were only slightly lower at
101.00/101.50, versus 102.00, but will face pressure if risk
sentiment continues to deteriorate.
Investors continued to fret about the economic slowdown in
China and an increased cutback in the US Federal Reserve's
accommodative policy. This comes at a time when a heavy issuance
volume in the Asian US dollar market in January is again
weighing on the markets.
Year to date, some USD19.5bn of bonds have been sold, just
short of the USD22.6bn record issuance in January 2013. Last
week alone, nine deals of a combined USD3.1bn were printed and
one that broke the camel's back was Wanda Properties' 10-year
issue, which priced 455bp over US Treasuries.
Those bonds have gapped out to as high as 490bp/480bp
earlier this morning although they recovered to 482bp/472bp in
late afternoon trade.
China cash bonds have widened between 3bp and 8bp.
High-yield Chinese property paper was still weak after Wanda
repriced the entire sector last Thursday. Cifi 2019s eased to
94.5/96.00, while China South City 2019s lost support to slip to
96.50/97.50 from 99.000 on Thursday evening.
The risk-averse sentiment sank Greentown's new perpetual,
which fell 4 points from reoffer at par to 96.00/97.00.
In contrast, high-grade Towngas' new perpetual were faring
better with quotes at 101.00/101.50, reflecting investors'
flight from risky assets.
Indeed, the bid for Korean bonds was fairly healthy with
Korea National Oil 2019s attracting its share of bids. The bonds
were quoted at 119bp/114bp over US Treasuries, while Kexim 2024s
were at 114bp/109bp and KDB 2024s were at 114bp/109bp.