SINGAPORE, Sept 21 (IFR) - Asian new issues continued to rally today as credit spreads tightened in post-FOMC market conditions.
“Spreads have been compressed quite a bit earlier this week, so today’s tightening seems marginal in comparison,” said one trader.
“The US Treasury yields have spiked and everyone is back in the market buying as they expect the yield curve to flatten further.”
Asian high-grade credits pulled in about 2bp even as market participants were focused on the jumbo US$7bn-plus primary offering from Postal Savings Bank of China today.
An expected sovereign bond issue from China in the near future has also stirred robust demand for secondary paper from Chinese state-owned enterprises over the past few weeks since China announced its intention to sell bonds.
As a result, Sinopec’s 3.625% 2027s have narrowed substantially from 130.7bp over US Treasuries at end-June to around 108bp today.
State Grid of China’s 2027s were at 123.2bp at end-June but have tightened to indications of 97bp/94bp today.
The constructive mood has also benefited Beijing Infrastructure’s newly printed 2.75% 2020s which were seen at around 110bp, 15bp inside reoffer of 125bp.
SP PowerAssets 3% 2027s tightened about 1bp today to around 70bp, after narrowing 6bp yesterday from Tuesday’s reoffer of 77.5bp.
Recent US dollar offerings from Australian issuers, such as Goodman US Finance which sold US$850m on Tuesday, were still around reoffer levels. Traders said flippers were in the market, putting pressure on the bonds.
Asian credit spreads were flat, although the iTraxx Asia IG index yesterday rolled into series 28 which was quoted at 79bp/80bp. The series 27 were quoted at 71/72bp.
Reporting by Kit Yin Boey; Editing by Vincent Baby