SINGAPORE, Feb 10 (IFR) - Asian credit markets tightened
slightly today as investors covered shorts amid better sentiment
towards credit, following a weaker-than-expected US nonfarm
payroll number on Friday.
The US Labor Department reported that day that 113,000 jobs
had been created, while the median forecast among economists
Reuter surveyed had projected 185,000 new jobs. As a result, the
US Treasury yield dropped 1bp during the US session.
Today, Asian bonds not only caught up, they even
outperformed the benchmark. As a result, bonds like Indonesia's
2044s were 35 cents to 50 cents higher in price terms, last
quoted at 102.75 mid-market.
The new bonds of Korea Gas and Korea Midland Power, which
were among the most active in trading, ended the day unchanged
at mid-market spreads of 120bp and 128bp, respectively.
Credit default swaps also moved and China's five-year
protection, which was offered on Friday at around 94bp, was last
bid at 91bp. This had an impact on the Asia ex-Japan IG iTraxx
index, which closed the session about 1bp tighter, quoted at
A new dollar sukuk bond offering from Export-Import Bank of
Malaysia, rated A3/A-, was offered at 165bp over US Treasuries,
a level that looked tight at first glance, but, which traders
said, was more than enough to attract interest.
The 2017 bonds of Maybank and Mexim were being quoted at
180bp and 190bp, respectively.
"But you can bid 175bp and you still will not find anyone
willing to sell these bonds," said one trader. "There is none of
this high-quality financial paper to be found easily," he added,
suggesting the deal would see strong demand, in spite of being
offered through the implied curve.
On the flip-side, bankers saw the new five-year bonds of
Agile Property Holdings as cheap. Yet, despite what considered a
large new issue concession, there was little impact on other
high-yield property bonds, which did not weaken in price on the
back of the new deal.