October 23, 2017 / 8:22 AM / a year ago

ASIA CREDIT CLOSE: Spreads stay tight despite U.S. risk rally

SINGAPORE, Oct 23 (IFR) - Asian markets seemed to ignore Friday’s risk rally in the US, with spreads barely moving. Treasuries widened and stocks jumped on Friday after the U.S. Senate passed a budget resolution, bringing planned tax reforms a step closer to happening.

Counter-intuitively, the Asia ex-Japan iTraxx investment grade CDS index tightened 1bp to 73.8bp/74.4bp. The iTraxx Japan index tightened half a basis point to 48.25bp/49.25bp, following the ruling party’s decisive win in yesterday’s election.

In Asian investment grade credit, CDB Financial Leasing’s 2023 bonds widened 1bp in spread terms to 113bp, while its 2027s tightened 1bp to Treasuries plus 121bp.

CK Hutchison’s 2020s tightened 1bp to 69bp, while its 2023s and 2027s were flat at 90bp and 100bp, respectively.

South Korea’s 2023 bonds widened 2bp to Treasuries plus 83bp, while its 2027 bonds widened 1bp to plus 72bp. The Korean sovereign is likely to be a reference point for China’s five and 10-year sovereign bond offering, which is targeted for Thursday.

Chinese high yield was unchanged to moderately lower today, said a credit trader.

“Some of the recent high-yield issues have dropped back a bit lately, but they’re still doing okay,” said the trader.

Indonesia’s Geo Energy Resources’ Single B rated 2022 bonds have rallied almost three points since pricing at the end of September, and were bid at a cash price of 101.7.

Noble Group’s 2022 bonds gained 1.5 points on news that the commodities trader had agreed to sell Noble Americas, a global oil liquids business. The notes were seen at a cash price of 38.9, giving an almost identical implied yield of 38.8%.

Reporting by Daniel Stanton; Editing by Vincent Baby

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