HONG KONG, Feb 20 (IFR) - Asian IG credits pulled modestly tighter in the morning session, with attention focused on bank and corporate names. The buying of the IG sector intensified after lunch when Kexim announced its plan to price a benchmark-sized US dollar 5-year “green bond,” with the announcement repricing the IG curve, which is looking to close out around 5bp tighter at the 5-10-year points.
As a measure of the positive tone, which has also come from strength in equities on the back of positive German economic data, the IG iTraxx index is closing out 3bp tighter at 105.5 mid.
Despite the better tone in IG, offshore sovereign curves were for the most part unchanged. The Philippines 2020s are unchanged at 125.75 while the 2022s are also flat at 111.
”The market is seeing bouts of sporadic buying of better rated names, although there still doesn’t seem to be too much conviction, with a lot of people nervous about the direction of Treasury yields and its impact on bond prices.
A grinding higher of Treasury yields would cause spreads to compress but any upward spike would probably lead to a big sell off of credit a a consequent spread widening,” said a Hong Kong-based trader.