SINGAPORE, Sept 21 (IFR) - The main news was Bank of Japan
tweaking its quantitative easing programme today, announcing
that it would target a 10-year government bond yield of zero, as
part of plans to control the yield curve.
Fund managers said it meant the BoJ was likely to be able to
maintain its quantitative easing programme for longer.
The 10-year US Treasury yield jumped 4bp following the
announcement, before dropping back to 1.70%, only 1bp higher
than it started the Asian session.
Asian credit markets were broadly unchanged in a quiet
market waiting for signals from the US Federal Reserve on its
The market is expecting no hikes in the US Fed rates but is
eager to find clues for the next Fed meeting in December.
"I don't see any rate hike in December honestly," said one
trader. "It will be a new administration in place by then and I
can't imagine the new officials will want to change the policy
He noted that market players had made profits over the last
six months and were unlikely to take any risky positions ahead
of the uncertain US elections.
"It is going to be a lot of cleaning up and consolidation of
their portfolios over the next couple of months and people will
need to be cautious. This will mean the secondary markets will
be rather quiet."
A heavy pipeline of new issues will also divert investors to
the primary market, although the two deals that priced yesterday
were not performing.
Country Garden's new 4.75% 7NC4 bonds were quoted at
98.25/98.50, slightly under reoffer price of 98.5391.
Woori Bank's new AT1 notes were priced at a yield of 4.5% -
offering some 100bp pick-up over its outstanding AT1 bonds but
there was no follow-up bid seen in the secondary markets. The
bonds were quoted at around 99.875, below reoffer at par.
Woori Bank was not alone with a weak AT1 performance as
market players wait for upcoming supplies. State Bank of India's
5.5% AT1 were quoted at 99.50, still under reoffer at par.
"I don't think anyone will touch it unless the levels drop
to 97.00," said the trader.
(Reporting by Kit Yin Boey; Editing by Vincent Baby)