January 5, 2017 / 8:10 AM / 7 months ago

ASIA CREDIT CLOSE: Aoyuan rallies amid firm market sentiment

SINGAPORE, Jan 5 (IFR) - Asian credits were firm as buyers returned from their December holidays to put cash to work.

Credit spreads were tighter on the support of gains in the regional stock markets.

The iTraxx Asia investment-grade index was about 2.5bp tighter at 114bp/116bp on a similar narrowing in some of the more liquid sovereign benchmarks, such as China and Indonesia.

The Philippines saw its 5-year CDS pull in nearly 4bp to 103bp/106bp.

Asian high-yield bonds were firmer, with China Aoyuan Property Group's newly priced 2020s surging half to three-quarters of a point. The notes, Asia's first high-yield issue of the year, priced at par with a yield of 6.35%.

"I see a lot of buyers in the market for high-yield paper, though there was a bit of short-covering, but the sense from these guys is that there will not be a big sell-off in January," said one trader.

"Fundamentally, the picture has not changed and there are still a couple of headline risks."

Yingde Gas 2020s performed marginally better today with quotes around 86.75, after dropping one point yesterday, but still well below 89.25 indicated on January 3.

The company repaid a HK$820m bank loan due on January 3 using a new offshore bank facility secured against onshore pledged deposits.

Market players will keep a close eye on January 10, when a board meeting is due to be held.

Reporting by Kit Yin Boey; editing by Dharsan Singh

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