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ASIA CREDIT CLOSE: Japanese recession adds to dark day for credit
November 16, 2015 / 9:12 AM / 2 years ago

ASIA CREDIT CLOSE: Japanese recession adds to dark day for credit

SINGAPORE, Nov 16 (IFR) - The Japan iTraxx index widened 8bp to 74.25/76.25 after data showed that Japan had returned to recession, with a quarter-on-quarter decline in Q3 GDP of 0.8%.

Deutsche Bank wrote in its morning note before the GDP release that it expected a second quarter of negative growth, and that the Bank of Japan was unlikely to react as it had already factored it in.

The iTraxx Asia ex-Japan widened 7bp around lunchtime, before gaining ground by mid-afternoon to stand 3bp wider on the day at 132bp/134bp.

Chinese financials were around 2bp tighter at the 5-year mark. Chexim’s 2020s were 7bp tighter at T+111bp.

Shanshui Cement’s 2020s were seen around 64/66 today, with trading said to be quiet. “People who wanted to sell have sold already,” said a trader. “People have taken their views.”

The Shanshui bonds had traded up to 70 last week on speculative trading from hedge funds, but now investors are uncertain whether the company will pursue winding-up measures or is simply using them as a threat to bring its shareholders in line.

Kaisa’s 2020s were at 71.5/73.0 today, and the rest of the complex in the low to mid 70s, as investors waited for more developments around its offshore restructuring proposal.

Reporting by Daniel Stanton; Editing by Vincent Baby

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