October 7, 2013 / 9:28 AM / 4 years ago

ASIA CREDIT CLOSE: Credit outperforms stocks; London brings risk-off

SINGAPORE, Oct 7 (IFR) - Asian credit markets outperformed stock markets today as the asset-class was ending the day unchanged while equity markets from Hong Kong to Tokyo traded lower.

The Nikkei 225 index ended the session down 1.22%, while the Hang Seng was heading 0.71% for the day.

Meanwhile, the Asia ex-Japan IG iTraxx index was finishing unchanged, last quoted at 150bp/152bp. The index had tightened about 2bp before lunchtime in Hong Kong and Singapore, but it gave back earlier gains as European markets opened in a downbeat tone.

"London brought some risk-off," a Singapore trader said.

Volumes, however, were not significant with only a few scraps trading throughout the session.

There was some institutional demand for short-term Indian paper, especially from the financial sector, according to a trader in Hong Kong.

Axis Bank 2016s and SBI 2015s ended about 2bp-3bp tighter. And there was some demand for the perpetual bonds of SBI and ICICI as they trade to their call in 2017, the trader said.

Korean cash bonds also continued to perform well. The new bonds from Korea Western Power were closing about 3bp tighter, and were last quoted at 159bp/156bp.

The sole underperformer was the new Basel III compliant Tier 2 bond sold by ICBC (Asia) last Thursday. Those bonds, which printed at 315bp over Treasuries, were last quoted at 340bp, 5bp wider on the day.

"This is a function of the allocation to the Asian base, which was expecting to make a fast buck but is still selling," said one trader.

Indeed, most desks saw profit-taking from retail accounts, which comprised 45% of the final allocation of ICBC Asia's bonds, in general.

"Institutionals are buying select bonds, but retail has been taking profits," said the Singapore trader.

Christopher.Langner@thomsoneuters.com

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