April 18, 2017 / 9:18 AM / 3 months ago

ASIA CREDIT CLOSE: U.S.-N.Korea tension adds to investors' worries

2 Min Read

SINGAPORE, April 18 (IFR) - Heightened tensions between the U.S. and North Korea, which showed off ballistic missiles during a military parade over the weekend, added to investors' already skittish mood ahead of a heavy pipeline of new bond issues.

South Korean sovereign CDS tightened around 1bp during the trading session, as U.S. Vice President Mike Pence said during a visit to Japan today that the U.S. was committed to reining in North Korea.

The Asia ex-Japan iTraxx investment-grade index was flat at 102bp/103bp, but several recent issues have slipped in secondary trading.

Bank of China's 2022 and 2027 bonds have widened since their offering at Treasuries plus 118bp and 141bp, respectively, wider by around 6bp each.

Citic Securities' 2020 bonds were seen at Treasuries plus 143bp, out from a spread of 135bp originally, and its 2022 bonds have widened to Treasuries plus 155bp from 150bp.

Beyond China, Oil India's recent 10-year bonds were bid at Treasuries plus 187bp, almost 15bp wider than the reoffer spread of 172.5bp.

Chinese high yield was a quarter of a point to half a point lower on thin volumes.

"The big accounts are holding up, and it's mainly the smaller accounts and private banks selling," said a trader. "People are not really active after the holiday, but there is some marginal selling."

CCB Life's Core Tier 2 bonds were slightly above the offer price of par, quoted at 100.1.

Indonesian high-yield bonds were a shade weaker.

Indika Energy's 2022 bonds dropped a quarter of a point to a cash price of 98, more than 1.5 points below issue, while Sri Rejeki Isman's 2024s were down an eighth of a point to 98.375, nearly a point down from the original offer price.

Reporting by Daniel Stanton; Editing by Vincent Baby

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