March 5, 2014 / 10:37 AM / 3 years ago

ASIA CREDIT CLOSE: Credits rally as sentiment improves

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HONG KONG, March 5 (IFR) - Activity in Asia's credit markets continued to pick up in the aftermath of President Vladimir Putin's decision to order troops near the border with Ukraine to return to base.

The Asia ex-Japan IG iTraxx index was quoted at 128bp/130bp, 4bp tighter than at the open, while spreads on cash bonds were 3bp-5bp tighter on average, mostly recovering after widening on Monday.

The unwinding of safe-haven bids pushed the yield on 5-year US Treasuries 1bp higher to 1.543%/1.541% and the yield on the 10-year 8bp higher to 2.6987%/2.694%, while the appetite for riskier credits returned.

Spreads on sovereign bonds were marked up by around 5bp across the board today, with bonds from the Philippines and Indonesia attracting particular interest. Indonesia's long end was some 20 cents higher, with the 2044s quoted at 108.45/108.69 today from 108.25/108.50 yesterday. Philippines 2034s were quoted at 124.12/124.06 today from 124.06/124.01 yesterday.

The markets also showed no response to news reports yesterday that North Korea tested a new multiple-rocket launcher. In fact, spreads on South Korea bonds tightened by 2bp-3bp today and those from its neighbor China were 3bp-5bp tighter.

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