SINGAPORE, Feb 25 (IFR) - Investment-grade bonds in Asia
ended the session today unchanged to slightly wider as investors
reversed course and sold paper that had started the day tighter.
Bonds of Chinese banks, for instance, started the session
1bp-2bp tighter after an overnight rally in the US equity
markets, but gave back the gains after ICBC International
announced a new 3-year issue and amid general fears related to
the Chinese currency.
The renminbi has dropped 0.76% in the past week in one of
its sharpest declines of all time.
Bond investors in Asia felt that the move was mostly a
People's Bank of China tactic to force people to unwind some
long bets on the Chinese currency.
"The PBoC is trying to give some people a bloody nose,
that's all," said a portfolio manager in Singapore.
However, the move, added to another day of volatility in the
Chinese stock market and saw investors take profits at least in
any Chinese bonds that rallied in early trading.
The Shanghai Stock Exchange Composite Index was down 2.04%
today and has lost 5.51% since the past week. The property
sub-index of the exchange is faring worse, falling 2.12% today
and 8.3% in the past week.
Bonds of property companies were resilient relative to their
equity counterparts. Most ended virtually unchanged today, with
some selling in Evergrande and Greentown, which both finished
roughly 25 cents weaker in price terms across the curve.
The 2018s of China Vanke also were hit and ended the session
wider, quoted at 335bp/330bp, some 10bp wide to where they were
Investors were selling paper of these companies more than
others because they have traditionally relied more heavily on
trust financing and they were more aggressive about lowering
prices in the last property price downturn, according to one
Otherwise, there was support for investment-grade with the
recently issued bonds of New World Development and Sun Hung Kai
outperforming the market to close 2bp-3bp tighter.
The CDS side was steadier today, with Chinese 5-year
protection ending unchanged and the Asia ex-Japan iTraxx IG
index last quoted at 135bp, 1bp wider in the session.