May 16, 2014 / 9:28 AM / 3 years ago

ASIA CREDIT CLOSE: India credits outperform on election outcome

HONG KONG, May 16 (IFR) - Asian credit spreads widened slightly on Friday, led by investment grade bonds, but Indian names outperformed as election results from the country indicated the main opposition party gained enough seats to win.

The iTraxx Asia IG index rose to 120bp-121bp from yesterday's 115bp.

"Most of the bonds got hit because of the Treasury strength overnight that triggered profit-taking," said a Singapore-based trader.

Indian bonds recovered, however, and traded 5bp-7bp tighter on the day. The State Bank of India's 5-year CDS fell to 205bp.

Indian corporate bonds were volatile, meanwhile. Bharti's newly issued 2024s widened by 8bp to yield 260bp over Treasuries this morning, but the securities recovered by 10bp after news of the election results.

Yields on bonds from Chinese state-owned companies widened by 5bp. CNOOC 2024s widened 5bp on the day to a spread of 155bp. Profit-taking seen in Sinopec 2022s and CNOOC 2021s.

In the high-yield market, Yanzhou Coal Mining's NC2 perpetual traded up to 101.75 after pricing at par yesterday.

Country Garden Holding's new bonds traded around the reoffer level of 98.989 and Guotai Junan Financial Holding's 5-year credit-enhanced bonds traded 5bp tighter from the reoffer yield of 215bp over Treasuries.

Prices of Sunac China Holding's bonds dropped after it announced plans to buy up to 30% of Greentown China Holdings, another property developer. Sunac's 2018s dropped to 95.5 today from 99.5 yesterday.

Traders said the market was supported by the tapering off of bond supplies in recent weeks, however, US Treasury yields will be watched for further market direction.

Neha.dsilva@thomsonreuters.com

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