SINGAPORE, Jan 21 (IFR) - Unsuprisingly with the United
Statesout today for the Martin Luther King holiday, Asia's
credit markets had something of a subdued trading session. The
supply overhang continues to be a technical drag and the Street
is net long paper, although a Singapore-based credit trader said
that he was surprised at the speed with which the supply glut
has been absorbed.
The tone remains bullish on the back of a potential deal on
the US debt ceiling and improving US fundamentals although there
remain nerves about the chances of inflationary pressure
emanating from Japan's plan to target 2 percent inflation and
the country's ongoing asset purchase programme.
For the day, the iTraxx IG index is unchanged at
106bp/108bp, with little going through, either on the outright
or hedged sides.
The trader suggested that the market is hungry for FIG
issuance, either at the senior or bank capital level and that it
would fly through the door, but that Asia's well-capitalised
banks are unlikely to provide the supply investors are hoping to
Meanwhile sovereign spreads continue their drift wider, with
the sector around 15bp-20bp wider since the start of the year,
led by the Indonesia cash curve.
On the day, both the Philippines and Indonesia cash curves
are off a quarter point, with offshore selling outweighing local
buying, although the latter remains a key technical support for
the sovereign sector in both countries.
The recently issued Thai Oil 10s/30s combo remained well
supported today although at a plus 177bp/172bp and plus
190bp/185bp two-way respectively, the market's illiquidity is
obvious, with the touch on just a 3bp bid/offer spread last
Friday rather than today's 5bp.