February 9, 2018 / 8:53 AM / 15 days ago

ASIA CREDIT CLOSE: Credits weak; long-end faces mounting pressure

HONG KONG, Feb 9 (IFR) - Asian credits were weak on Friday as the sell-off in regional stock markets and rising US Treasury yields dented sentiment.

Investment-grade credits were seen 5bp-10bp wider at the long end of the curve, while the high-yield segment fell by 1-2 points.

“Longer-dated bonds are facing more selling pressure as investors are worrying about the prospects of rising inflation and faster-than-anticipated monetary tightening in the US,” said a Hong Kong-based trader.

A research report from Bank of America Merrill Lynch suggests that Indonesian BB rated property names, Chinese A rated internet names, Indonesian BBB rated and BB rated industrial names, are most vulnerable to rate increases while Chinese and Korean high yield are the least vulnerable.

The iTraxx Asia ex-Japan investment-grade CDS index was spotted at 76bp/78bp, which was about 16bp wider than this year’s tight of 60.5bp on January 12.

Asian primary issuance in dollars came to a halt due to the weak sentiment with no deals are marketed today.

Chinese property developer Fantasia Holdings’ US$300m 7.25% 364-day notes, priced at par last night, traded up and were quoted at 100.125/100.325 today.

Indonesian coal producer Golden Energy and Resources’ newly priced US$150m 9.00% 5NC3, priced at 98.53 with a reoffer yield of 9.375%, were quoted at 98.50/98.75 but without liquidity.

This week’s new issue of Daegu Bank 3.75% 2023s, priced at 135bp over US Treasuries on Wednesday night, was wider at 121bp/117bp, from yesterday’s 117bp/116bp.

Meanwhile, the Maldives’ 7.00% 2022s have fallen 4 points to 96.695/97.755 this week since President Abdulla Yameen declared a state of emergency on Monday amid political unrest.

Fitch on Thursday said the political instability could hit the south Asian island country’s important tourism sector.

Reporting by Carol Chan; Editing by Vincent Baby

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