July 6, 2015 / 9:29 AM / 2 years ago

ASIA CREDIT CLOSE: Credits settle after Greek referendum boosts risk aversion

HONG KONG, July 6 (IFR) - Asian credits began stabilising in the afternoon even after Greece's rejection of austerity measures led to a directionless morning session.

After hitting its weakest level at 114bp in five months at least this morning, the iTraxx Asia ex-Japan investment-grade CDS index has regained some momentum and now trades about 2bp wider on the day at a bid of 112bp.

CDS costs for PCCW-HKT and Hongkong Land tightened 6bp and 2bp, respectively, while the cost to protect against default also came down 2bp for Woori Bank.

Still, there was a widening of CDS for Asian sovereigns, such as China, Indonesia, South Korea. Malaysia's 5-year CDS widened 2bp.

A gain of more than 2% in China's onshore equity indices also lifted confidence that the government's efforts to curb losses are starting to take hold.

Chinese high-yield bonds remained relatively stable amid the broader weakness, with Cifi Group's 7.75% June 2020s rising more than half a point to 97.800.

Noble Group's bonds were mixed in trading after the company said it would redeem its outstanding USD235m 6.625% August 5 2020 senior notes at par on the redemption date of August 5 this year.

Those bonds fell four-tenths of a point to a bid of 99.460, according to Thomson Reuters Eikon, while the price of Noble Group's 6.75% January 2020s dropped half a point to 102.800.

Meanwhile, Berau's 2015s were last seen at 62/64 and its 2017s at 60/62 ahead of the maturity of its USD450m 12.5% bonds on Wednesday.

While there has been no official statement on whether the bonds will be redeemed on schedule, bondholders are expecting the issuer to apply for a stay under Singapore law before resorting to a similar scheme in Indonesia for the whole business.

Reporting By Frances Yoon

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