February 22, 2018 / 8:57 AM / a month ago

ASIA CREDIT CLOSE: Asian credits broadly unchanged despite volatile rates

SINGAPORE, Feb 22 (IFR) - Asian credits were largely flat with market participants on the sidelines after US Treasury yields rose sharply overnight.

The 2-year Treasuries were up 5bp to 2.27% while the 10-year jumped 6bp to a four-year high of 2.95%, prompting a sell-off on Wall Street.

Asian equity markets were in the red today after taking their cue from the overnight decline of 0.67% in the Dow Jones. The Hang Seng index was 1.48% lower while the Nikkei lost 1.07%.

Despite the soft equities, Asian credit spreads were flat with the iTraxx Asia ex-Japan IG index largely unchanged at 70bp/71bp.

Secondary markets were quiet but steady, with the focus on the first deals since the Chinese markets reopened after the week-long Lunar New Year holiday.

The Republic of Indonesia is marketing a US dollar five-year green sukuk and a 10-year regular sukuk, respectively at 4.05% area and 4.70% area, while Far East Horizon is offering US dollar five-year notes at 200bp area over Treasuries and a three-year Dim Sum at 5.2% area.

“The markets are still a bit thin as players are sitting on the sidelines because of rate volatility,” said one DCM syndicate banker.

Indonesia’s sovereign yield curve was mostly unaffected by the new bond, said a banker watching the new deal.

The sovereign’s longer-dated outstanding notes fell slightly while the shorter-dated notes recouped some of their earlier losses.

The 3.4% 2022s were seen at 99.60 while the 4.15% 2027s were at 99.62, according to Thomson Reuters data.

Among high-grade credits, China Cinda’s recent bonds were mostly flat with the 3.875% 2023s at 143bp over Treasuries and the 4.375% 2025s at 179bp.

Reporting by Kit Yin Boey; Editing by Vincent Baby

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