HONG KONG, Sep 5 (IFR) - Asian credit spreads tightened on
Friday after additional stimulus announced by the European
Central Bank overnight strengthened global risk appetite.
The Asia ex-Japan IG iTraxx index was last cited 2bp tighter
to 90bp after the ECB cut all three of its rates and pledged an
asset-backed security and covered bonds purchasing programme.
China investment-grade spreads tightened as much as 5bp,
while the country's high-yield names also continued to tighten
even as some investors had feared that the summer rally would
start to unwind.
Meanwhile, 10-year US Treasury yields rose 4bp to 2.45%.
"You can't fight the central bank," according to a
Singapore-based trader. "The bears keep losing."
The trader added that the constructive backdrop drove an
increase in demand from real-money investors, particularly from
New issues such as West China Cement USD400m 5-year non-call
3 6.5% traded near reoffer levels.
One trader warned that the ECB boost for Asian credits could
subside after the US announces nonfarm payrolls data today, with
economists projecting that payrolls rose 225,000 last month.
That would be the seventh straight month that employment
expanded above 200,000 jobs.
"There is concern that better data could drive Treasury
yields higher," he said. "Investors are anecdotally positioned
for that. But I could also see a weaker number driving the
10-year yield to 2.3%, which will be positive for credit."