January 24, 2018 / 8:46 AM / 3 months ago

ASIA CREDIT CLOSE: Credit stable after US Treasuries strengthen

HONG KONG, Jan 24 (IFR) - Asian credit markets were stable on Wednesday after US Treasuries yields fell overnight, but some Chinese new issues came under pressure amid supply concerns.

Traders said overall market sentiment in Asia was robust and trades in investment-grade bonds were rangebound.

The Asia ex-Japan iTraxx investment-grade CDS index was quoted 2bp tighter at 62bp/63bp.

However, most of the new offerings by Chinese issuers printed yesterday did not perform in the secondary market.

Chinese developer Shimao Property Holdings’ new seven-year non-call four US dollar bonds traded slightly below par, while conglomerate Fosun International’s US$450m new five-year non-call three notes dropped half a point.

“Both issues (Shimao and Fosun) did not offer juicy yields for investors, who have lot more to choose from the China high-yield sector given the strong supply,” said a Hong Kong-based credit analyst.

Meanwhile, Xiamen Xiangyu Group’s new 2023s traded around reoffer price this afternoon after slightly widening this morning.

Xiangyu initially marketed a dual tranche offering yesterday but dropped a three-year tranche before final guidance was announced.

A banker familiar with the deal said the issuer wanted to do the longer tenor only after orders for the five-year tranche were robust enough for it to raise US$500m.

Tencent’s 2028s were little changed, being bid at a cash price of 99.30. Carrefour said yesterday it was seeking a partnership in China with Tencent in the face of competition from Amazon.

Reporting by Ina Zhou; Editing by Vincent Baby

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