HONG KONG, July 11 (IFR) - Debt concerns spurred by Portugal’s largest listed lender had a marginal affect on Asian credit spreads on Friday, as investors focused on buying new issues and Chinese property bonds.
Investment-grade credit spreads widened about 1bp today. The slight move came as shares of Banco Espirito Santo were halted after a 19 percent drop on Thursday because of concerns with the bank’s financial health.
Shares were only slightly lower in Hong Kong, Japan, Taiwan and South Korea.
“It was a flash in the pan,” according to a debt syndicate banker. “Markets came back overnight and European stocks are in the green. This shouldn’t affect next week’s pipeline.”
Trade and Development Bank of Mongolia, or TDBM, cancelled a planned 144A/Reg S US dollar-denominated offering this morning, but the banker said that decision did not point to potential weakness in Asia’s credit markets.
Investors did not appear deterred by BES’ troubles. China Gold International Resources’ new USD500m 3-year Reg S bond’s tightened about 20bp over 2-year US Treasuries in afternoon trading amid views that the deal was offering an attractive premium, according to a Singapore-based trader.
Investors also returned to Chinese property names, narrowing spreads in that sector by 1bp.
“Yesterday the sector was 5bp lower, and people are buying in again because yields look attractive at these levels,” according to another Singapore-based trader.
Indonesia’s sovereign bonds continued to trim gains this morning by an eighth, after having rallied on election euphoria a few days before vote counting began on Wednesday.
The Indonesia 2024s were cited at 111.875, while the 2044s were down to 116.875, according to another trader.
“We saw investors taking profit after we heard [Indonesian presidential candidate] Prabowo Subianto making noise and that stopped the rally,” he said. “We’re actually at levels right before the election. If he concedes, we might see a small rally.”