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ASIA CREDIT CLOSE: Pullback in risk weighs on markets
November 13, 2017 / 9:22 AM / 4 days ago

ASIA CREDIT CLOSE: Pullback in risk weighs on markets

HONG KONG, Nov 13 (IFR) - Asian credit markets felt the impact of last week’s weak finish in the U.S., which undermined risk appetite amid concerns that Congress could struggle to implement meaningful tax reform.

The iTraxx Asia ex-Japan IG index was spotted at 80bp/81bp, the widest level in six weeks, according to Thomson Reuters data.

Bank of China and Bank of India’s CDS spreads widened 4bp, while the People’s Republic of China’s credit protection costs widened 2bp.

The rise in new issue premiums at the end of last week is cause for concern, according to a Hong Kong-based syndicate banker.

“There’s a massive pipeline especially in USD for China, and China CDS is up and US Treasury yields are also wider,” he said. “This market could be a bit difficult for primary if Chinese issuers are going to want to pay minimal concessions.”

Ten-year US Treasury yields reached 2.67%, the highest since October 27. However, private banking investors were still spotted buying perpetuals.

Money went into Huarong’s 4.0% perps, DBS’s 3.6% perps and Baidu’s 2025s, according to a Singapore-based credit salesperson.

In individual credits, Alibaba’s 3.6% 2024s were 2bp wider after IFR reported that the company is this month planning its second US dollar bond.

Bonds of HNA Group, which raised concerns after raising a 364-note at 8.875%, was trading around par.

Reporting by Frances Yoon; Editing by Vincent Baby

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