January 9, 2014 / 9:47 AM / 4 years ago

ASIA CREDIT CLOSE: New issues hold up in secondary

SINGAPORE, Jan 9 (IFR) - New issues held up in the secondary market today, giving investors renewed comfort that there is room for the expected spike in supply this month.

Most of the bonds priced earlier in the week were trading tighter and even those not rallying were not losing ground.

The best performer was the new 10-year fixed-rate bond Kexim sold on Wednesday. This bond was quoted at 103bp/101bp, having priced at 112.5bp over US Treasuries.

“This is kind of expected as European and US credit markets have been going gangbusters and Korean credits tend to follow those markets,” said a credit analyst in Singapore.

The new 10-year bonds of Hongkong Land were also performing well, last quoted at 167bp/169bp, having priced at 175bp. The new 3-year bonds of the Bank of Communications were 2bp-3bp tighter, quoted at 182bp over the 2-year US Treasury.

Indonesia was the underperformer of the lot, as it ended the Asian session unchanged from where it started. The new 2024s and 2044s had lost some of their earlier gains during US hours and closed the Asian session quoted at 100.75/101.00 and 100.45/100.70, respectively.

Both had left Asia yesterday flirting with 101.00. They are still much higher than the reoffer prices of 99.441 and 98.734.

The new issues from high-yield Chinese property developers R&F Properties, KWG and Kaisa were all quoted around reoffer, mostly unchanged from yesterday.

While the more active new issues were doing fairly well, there was some pressure building up on the CDS side. Hedge funds have been buying protection for most of the week due to weaker equity markets and downbeat economic data from China.

As a result, the Asia ex-Japan iTraxx IG index closed today at 138bp/140bp, about 2bp wider than yesterday and some 6bp wider than where it started the week.


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