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ASIA CREDIT CLOSE: Credits wider on heightened rate-hike expectations
March 9, 2017 / 8:05 AM / 9 months ago

ASIA CREDIT CLOSE: Credits wider on heightened rate-hike expectations

SINGAPORE, March 9 (IFR) - Asian financial markets weakened as sentiment turned cautious ahead of the US Federal Reserve meeting next week.

Equities fell in the region with the Hang Seng Index down 1.2% and the Shanghai composite down 0.74%.

Asian credit spreads were 3bp wider. The iTraxx Asia investment-grade index was seen at 97bp/99bp in the morning, and stayed broadly unchanged for the rest of the day.

Among the sovereigns, Indonesia’s five-year CDS pushed out the most at 6bp-7bp during the day. It was last seen at 133bp/136bp.

An expected outflow of funds, due to expected hikes in US Fed rates, caused a wobble in Indonesia’s long-dated bonds. The sovereign’s 2047s dipped 1.25 points to 103 in cash price, while, in terms of spreads, the notes were 2bp-3bp wider.

“The market is rather soggy after the strong US ADP data was released,” said one trader. “The reasoning is that rates can spike for the rest of the year.”

The ADP employment report showed a 298,000 net increase in private-sector jobs last month, 111,000 more than projected.

The weak market sentiment hit new issues. Malaysian lender CIMB’s newly printed 3.623% 2022s widened to 124bp/121bp after having priced yesterday at 115bp.

Chexim’s new bonds were also under pressure. Its 2.625% 2022s were quoted at 88bp/87bp, slightly out from reoffer spread of 85bp. The 3.375% 2027s were indicated at 115bp/114bp, wider than the reoffer spread of 110bp.

In the high-yield segment, diminishing demand continued to weigh on Noble’s new 2022s, with a call in 2020. The notes sank to 97.00/97.642 from reoffer at par, and down from yesterday’s 99.5.

Reporting by Kit Yin Boey; editing by Dharsan Singh

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