HONG KONG, May 26 (IFR) - Asian credits were mixed on Thursday as investment-grade bonds came under pressure due to strong supply, while high-yield issues fared relatively better.
This week has seen the heaviest supply of bonds year-to-date as big names such as China Development Bank and state-owned power company China Three Gorges Corp have rushed to print deals.
"New issues have diverted demand from existing bonds, especially from Chinese names," said an IG trader. "Today, benchmark Chinese names were 2bp-3bp wider, while the notes of Three Gorges were 5bp wider."
However, sentiment in the high-yield sector was robust on technical support with paper of sportswear company 361 Degrees well sought.
"Because of the scarcity in high-yield supply, 361 Degrees was well supported, though it was expensive and it was not a very good name, "said a high-yield trader, based in Hong Kong.
He noted that 361 Degrees widened 1pt after it priced US$400m of 7.25% five-year non-call three bonds to yield 7.48% on Tuesday.
The iTraxx Asia IG index was a marginal 0.9bp tighter at 140bp/142bp.
Chinese e-commerce giant Alibaba's US$2014s were traded down 10bp on the news that US regulators are looking into its accounting practices to determine if it violated federal laws.