March 8, 2017 / 8:30 AM / 9 months ago

ASIA CREDIT CLOSE: Support for high yield as credit widens

SINGAPORE, March 8 (IFR) - The Asia ex-Japan iTraxx investment-grade index was flat today at around 94bp/96bp, but recent trading showed levels widening from a March 2 mid-spread of 93.25bp, the lowest of the year.

Even after the recent slip, Asian CDS tightened dramatically from the year’s starting level of 121bp. The 10-year US Treasury yield widened 7bp during the same period.

Asian high yield recovered after a wobble earlier in the week, as investors bought into weakness.

“The market is pretty resilient and nothing really feels like panic selling,” said a credit trader.

“The high-yield segment is range bound. It feels like there was a valuation adjustment; credit was running up too tight and people took profits.”

Many high-yield issues from recent weeks have rebounded or gone higher, and demand is still supportive. “We are still struggling to find paper to buy,” said the trader.

Mongolia’s 2024 bonds were flat at a cash price of 107.75 and Bukit Makmur’s 2022s were up a quarter of a point at 102.5. Road King’s perpetual bonds, callable in 2022, were flat at 102.5.

However, this week’s new issues saw less support. Noble Group’s new 2022s, callable in 2020, fell nearly half a point to a cash price of 99.5, and China SCE Property’s 2022s were bid at 99.2, having been issued at par.

Reporting by Daniel Stanton; editing by Dharsan Singh

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