December 17, 2015 / 7:49 AM / 2 years ago

ASIA CREDIT CLOSE: Asian credits rally in risk-on mood

SINGAPORE, Dec 17 (IFR) - Asian stocks and credits were lifted following the overnight move by the US Federal Reserve to finally raise rates by 25bp.

Asian credit spreads were up between 2bp and 4bp with the iTraxx Asia IG index quoted around 134bp/136bp in the afternoon. Japan’s Nikkei jumped 1.6% and the Shanghai composite index climbed 1.7%.

“Credit markets are not so bad, although there were no real dramatic gains among investment-grade paper,” said one trader. “We see more shorts being squeezed and we are seeing more clients adding paper.”

Benchmark oil and gas long-dated bonds maturing in 2025 were adding around 5bp, with Sinopec and Petronas bonds enjoying the bidding tone. Other liquid credits were seeing gains of 1bp-4bp.

Healthy demand was also seen in the high-yield space, which rallied a quarter to half a point. Private bank clients were bigger buyers than institutions, as the latter have mostly closed books and gone on their year-end breaks.

Chinese property names, in particular, benefited from the rally, with stronger demand seen for better quality names such as Cogard, Shimao and Agile. The Cogard 2020s were up half a point to around 105.875.

“We are ending the year on a fairly strong note, but whether it can be sustained is a big question,” said the trader.

Reporting by Kit Yin Boey; Editing by Vincent Baby

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