August 10, 2017 / 8:34 AM / 10 months ago

ASIA CREDIT CLOSE: Asia credits soft amid geopolitical concerns

HONG KONG, Aug 10 (IFR) - Asian credits were soft on Thursday on weak performances of regional stock markets amid ongoing geopolitical concerns over North Korea.

Investment-grade credits, in general, traded a further 2bp wider from yesterday’s level, with non-Chinese banks seeing more selling pressure, according to a Hong Kong-based trader.

The iTraxx Asia IG index widened marginally, indicated at 83.00bp/83.75bp.

“Tension between the US and North Korea is, of course, part of the reason for the correction, but more, I think, due to the tight valuations after recent rally, which saw spread tighten more than 10bp in the past three weeks,” said the trader.

South Korea’s sovereign 5-year CDS was about 4bp-5bp wider than last week’s tightest level, having been indicated today at 61.8bp/63.3bp. For comparison, China’s sovereign 5-year CDS was about 2bp-3bp wider during the same period, said the trader.

Recent new issues from South Korea were steady in the secondary market.

Industrial Bank of Korea’s 3.90% AT1s were bid at 99.704, while KT Corp’s 2.625% 2022s were bid at 99.532, both were little changed from yesterday, according to Thomson Reuters data.

Country Garden’s 4.75% 2022s fell 0.2 points to bid at 99.648. The Chinese property developer yesterday reopened for a US$100m tap for the bonds at 99.875, or a yield of 4.778%.

Yanzhou Coal’s 5.73% 2022s traded up 0.5 point to bid at 103.37 as Moody’s placed the Chinese coal miner’s B2 rating under review for an upgrade.

Wanda Properties’ 7.25% 2024s were flat and bid at 100.567. Sister company Wanda Hotel Development announced plans to buy assets worth over US$1bn from firms under the control of their parent, Dalian Wanda Group, as part of the latter’s restructuring plan.

Reporting by Carol Chan; Editing by Dharsan Singh

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