December 2, 2016 / 8:06 AM / a year ago

ASIA CREDIT CLOSE: Credits end week on back foot

HONG KONG, Dec 2 (IFR) - Asian credit markets ended the week on the back foot, as surging rates in the US had an adverse impact on investor sentiment.

US 10-year and 30-year Treasury yields had widened another 7bp overnight, with the former ending up about 15bp wider for the week.

Asian credits responded in defensive fashion and the iTraxx Asia ex-Japan investment-grade index was spotted just over 1.5bp wider at 125.50/127.50.

ChemChina’s recent debut euro bonds were being bid at 99.705 according to Tradeweb, after launching on Wednesday at par.

Chalieco’s perpetual non-call 3-year bonds were mostly unchanged, though they have gained about 1.25 points since last week.

High-yield names struggled, but there was a bright spot in Studio City’s 2021 bonds, which were trading about a quarter of a point higher. The bonds were spotted at 103.21, after issuing at par last week.

In the bank capital segment, South Korean lender Shinhan Bank’s recent Tier 2 issue gained about a tenth of a point before ending the day only slightly higher.

It was a similarly risk-averse session for equities which were also bid lower on the day. The Hang Seng was down 1.2% and Shenzhen by 1.6% in the late afternoon.

Also weighing on sentiment were this weekend’s Italian constitutional referendum and a US jobs report due today, although the latter is not expected to disappoint.

Asian primary markets are believed to have about a week left in the year to issue bonds, according to syndicate bankers, as a rising rate environment is making new deals more complicated to execute.

The US Federal Reserve is widely expected to raise interest rates on December 14.

Reporting by Spencer Anderson; editing by Dharsan Singh

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