HONG KONG, Oct 12 (IFR) - Asia credits were weaker on Wednesday amid a selloff in Dim Sum bonds on a further depreciation of renminbi.
“We felt that market sentiment was turning sour with overall spread slightly wider today,” said a Hong Kong-based investment-grade trader. “There were concerns over US Fed rate hike and bond supply looks still pretty heavy.”
He also noted that funds were more cautious moving towards the end of the year and were taking profit on early gains.
In the high-yield sector, Chinese property developers lost ground after the announcement of a string of policy-tightening measures on the mainland during the National Day holiday in a bid to cool down property prices.
China South City’s 6.750% 2021s were bid at 7.09%, while Country Garden’s 4.75% 2020s were bid at 5.21%, according to Tradeweb.
Dim Sum bonds also took a hit after the renminbi touched a fresh six-year low on Wednesday. Tianjin Eco-City 2018s were spotted at 4.05% after being quoted at 4.0% on Tuesday.
“We believe that the CNH market is being used as a policy tool, so CNH bonds may continue to suffer during the process of RMB internationalisation,” said HSBC in a recent report on offshore renminbi bonds.
The iTraxx Asia ex-Japan IG Index was 1.34bp wider.
Reporting by Ina Zhou; editing by Dharsan Singh