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ASIA CREDIT CLOSE: New issues take centre-stage, provide optimism
September 11, 2013 / 9:19 AM / 4 years ago

ASIA CREDIT CLOSE: New issues take centre-stage, provide optimism

SINGAPORE, Sept 11 (IFR) - Traders were busy today executing orders for new issues amid a pick-up in primary-market activity in the region with liquidity centered on deals printed in the past few days.

“It has been a bit lethargic in secondary away from the new issues,” said one trader in Singapore.

With most of the recently printed bonds performing well, investors are also feeling more confident about putting money to work.

Most of the trading today was focused on the new 5.5-year sukuk from the Republic of Indonesia, which rallied as high as 101.50 earlier in the day, having priced at par. It later retreated a bit as some accounts took profits to close quoted at 100.80/101.00.

KDB’s new USD750m 2019s, printed yesterday at 140bp over US Treasuries, told a similar story, trading as tight as 132bp in the beginning of the day, but settling at 140bp/137bp later in the day.

The best performer so far, though, have been the new 5-year bond from China’s ZhengTong Auto with a standby letter of credit from the Bank of China, Macau branch.

That bond was printed at a reoffer spread of 285bp and closed the day quoted at 262bp/260bp. “People like the pick-up the bond offered compared with other Chinese bonds that feature SBLCs,” explained one trader.

While cash was doing very well, the new issue flow took its toll on the CDS market. Investors buying protection for their added exposure to fixed income in the region prompted the Asia ex-Japan iTraxx IG to widen some 3bp and close at 138bp/140bp.

On the high-yield front, a reopening of the 5-year bonds of Chinese developer CIFI Holdings prompted some profit-taking on the name with the reopened bond dropping from 106.50 to 105.00 and dragging other names with it.

However, as rumours circulated that books on the deal were multiple times oversubscribed, the bonds recovered to close at 105.50/106.00.

That also boosted other Chinese property credits, helping the sector end about 25ct higher in price terms on average. As has been the norm lately, though, most of the buying was being driven by retail accounts.

Christopher.Langner@thomsonreuters.com

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