January 13, 2014 / 9:12 AM / 5 years ago

ASIA CREDIT CLOSE: New issues feel impact of competition

SINGAPORE, Jan 13 (IFR) - Activity in the Asian secondary debt markets was mostly focused on some new bonds, which faced competition from similar offerings announced today.

In the words of one trader, the market was “selectively wider,” with most of the weakness concentrated on the new bonds from the Export-Import Bank of Korea and Bank of Communications last week.

Kexim’s new 2024 bonds, for instance, widened 3bp to close bid at 106bp today after Korea Development Bank announced a new dollar issue at terms identical to those of its peer last week.

KDB is out with a new 3-year floating-rate note and a 10-year fixed-rate dollar bonds with initial guidance set at 80bp over Libor and 120bp over US Treasuries, respectively.

Bank of China, meanwhile, also announced a two-tranche offering, which took the shine away from BoCom’s 3-year bonds printed last week, which were, therefore, last quoted at 186bp/184bp over the 2-year US Treasury, or 3bp wider.

One banker saw that as evidence that accounts are reshuffling cash. While they want to buy the new issues, which in general offer higher coupons than similar bonds issued last year, they have to sell their current holdings to make space for the new stuff.

Otherwise, traders said there was little to write home about. “It feels a bit softer with some fast money selling, but not much going on,” said one trader.

High-yield bonds were also unchanged, as investors continued to digest the four issues from Chinese property developers last week. “People are still trying to assess what the pipeline will look like,” said one high-yield trader.


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