March 12, 2018 / 9:36 AM / in a year

ASIA CREDIT CLOSE: Inflation fears ease, but corporate bonds still lag

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HONG KONG, March 12 (IFR) - The iTraxx investment-grade Asia ex-Japan CDS index was 3bp tighter Monday at 64bp/65bp, as restrained US payrolls data on Friday calmed fears that inflation was set to soar.

South Korea’s 2027 bonds tightened 3bp to Treasuries plus 55bp on news that US President Donald Trump would hold talks with North Korea.

Elsewhere, Indonesia’s sukuk due 2028 widened 2bp to Treasuries plus 153bp, while its 2023 sukuk was flat at Treasuries plus 125bp. The Philippines’ 10-year yield widened 3bp to Treasuries plus 84bp.

The recent rough ride for Asian corporate bonds continued.

“It’s had a psychological effect on investors knowing that almost every issue has underperformed despite paying up,” said a syndicate banker.

Agile Group Holdings’ perpetual bonds callable in 2023 were little changed at a cash price of 99.5, slightly below the issue price of par.

Central China Real Estate’s 2021 bonds edged down to a cash price of 99.3, also having been issued at par, while China Minmetals’ new perpetual bonds were a shade higher at 99.9 but still below face value.

Noble Group’s 2022 bonds fell half a point to a cash price of 50.7 after the commodities trader missed a coupon payment due on March 9.

ChemChina’s dollar bonds offered a bright spot among recent issues. The 2021s were seen at Treasuries plus 155bp, 2023s at 179bp, 2025s at 197bp, and 2028s at 214bp. The bonds have tightened 21bp-27bp in Treasury spread terms since pricing.

Reporting by Daniel Stanton; Editing by Vincent Baby

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