SINGAPORE, April 9 (IFR) - Cash bonds were under the
spotlight today in the Asian credit markets, as strong bidding
interest led to plenty of trading activity.
Asian credits have seen a turnaround in sentiment towards
emerging markets over the past few weeks. The risk-on sentiment
has driven rallies in EM stocks, as well as EM currencies.
In China, initial wariness over the mini stimulus programme
announced last week has given way to more positive expectations,
while a potential new government in India with more
investor-friendly policies is drawing investors back.
"The market is very strong today," said one Singapore-based
trader, adding that investors had not expected the flow of new
issues to be as small as it turned out. "So, they are
underweight on duration, underweight on credit, and they are
back in the market to pick up more exposure."
Investors are also going further along on the duration curve
for better-yielding investments. That provided a big boost to
long-dated bonds, such as Indonesia's outstanding 2044s, which
were traded at 110bp over US Treasuries earlier today, well
inside the reoffer spread of 296.2bp.
China's BBB rated credits were narrowing 30bp-50bp in
spreads, with similar movements in Indian credits and
subordinated debt paper.
Oil India rode on a wave of renewed demand for Indian
credits, which pushed India's benchmark bonds to the tightest
levels since June 2011.
Oil India's newly priced 10-year bonds were rallying to
259bp, after they priced yesterday at 272.5bp, while the 2019s
were firmer at 214bp, inside the reoffer spread of 222.2bp.
High-yield credits also benefited from the healthy bidding
tone. Sri Lanka's new bonds were indicated at 100.75 after they
priced at par on April 7.
With investors fully focused on cash bonds, Asian credit
spreads were thinly traded. The iTraxx IG index moved a mere 1bp
tighter to 121bp/123bp.