January 19, 2018 / 8:25 AM / 7 months ago

ASIA CREDIT CLOSE: New issues fall on heavy supply, higher UST yields

HONG KONG, Jan 19 (IFR) - Asian credits were wider and new issues fell on Friday amid heavy primary supply and higher US Treasury yields.

The iTraxx Asia ex-Japan IG index was spotted 2bp wider at 63.00bp/63.85bp.

Investment-grade names, in general, were about 3bp-4bp wider. Most of the new issues priced last night traded weak.

“There’re too much new supply on the same day,” said a Hong Kong-based trader.

There were eight new Asian dollar bond deals and one euro bond deal priced yesterday and the market expects supply will stay heavy ahead of Lunar New Year in mid-February.

Guangxi Communications Investment’s US$200m 3.875% 3-year notes, priced at Treasuries plus 182.5bp, were under pressure and traded 14bp wider.

Geely Automobile’s US$300m 3.625% 5-year bonds, priced at Treasuries plus 130bp, were spotted 4bp wider.

BoCom Leasing’s US$1.5bn three-part bonds were also struggling. Its 3-year notes were hovering at reoffer while both 5-year and 10-year were around 3bp wider.

In the high-yield segment, China South City’s US$250m 7.25% 3-year notes fell to 98.25 in cash price, from reoffer of 99.011.

Tata Steel’s US$1.3bn two-tranche notes also traded weak. Its 4.45% 5.5-year notes and 5.45% 10-year notes, both priced at par, were quoted at cash prices of 99.85 and 99.70, respectively.

Peking University Founder Group’s US$600m dual-tranche bonds were the exception. Its 4.70% US$200m 3-year were flat while its 5.35% US$400m 5-year rose 0.25 point to 100.25.

Meanwhile, Inner Mongolia High-Grade Highway Construction and Development’s 4.375% 2020s, issued last November, fell 0.5 point to 99.00.

Fitch downgraded its rating to BBB- from BBB as the local government revealed that its fiscal and economic numbers for 2016 had been overstated.

Reporting by Carol Chan; Editing by Vincent Baby

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