SINGAPORE, Dec 19 (IFR) - Asian credits held steady in muted trade as US politicians fuelled prospects for conciliation on fiscal cliff talks. Buoyed by concessions made by both US President Barack Obama and the Republican opposition on tax hikes and spending cuts, Asian financial markets today took the lead from last night’s rally in Wall Street as regional stocks gained. The Nikkei 225 rose more than 2% to cross the 10,000 mark while the Hang Seng was up 0.7%.
Credit spreads in Asia were stable, with the iTraxx Asia ex-Japan IG Series 18 quoted at 107/109bp, still about 1bp in from yesterday’s close. Sovereign CDS were broadly unchanged with China’s CDS hovering at 59bp while South Korea narrowed about 1bp to 60bp.
In cash bonds, the last bond that was priced from Zoomlion rode on bullish sentiments in the past few days, with the 2022s rallying to 100.50/101.50 from a 98.625 reoffer price.
But a debt syndicate banker cautioned that prices were all over the place with bid-offer range wide apart in a very illiquid market. “The numbers are more nominal since really there are not that many players in the market,” he said.
Baidu bonds continued to stay weak though, with the 2022s quoted at 181/170bp - roughly unchanged from yesterday’s 175bp mid-spread, while the 2017s were at 135bp.
But robust bids - with most suspected to have come from onshore demand - have pushed cash bonds for the Republic of Philippines to all-time tights. The 2032s were quoted at 135.75 with a Z-spread of 131bp but it was in the shorter-dated 2021s that have tightened most - to 112.125 and a z-spread of only 85bp.
“There seems to be some positioning ahead of RoP’s potential tap in the offshore markets early next year,” said the banker. “The long-ends of the outstanding paper are a bit choppy with the US Treasuries weak but the short-end paper is looking more attractive.”