November 14, 2017 / 9:05 AM / a year ago

ASIA CREDIT CLOSE: Stronger tone, but investors push back on HY issues

SINGAPORE, Nov 14 (IFR) - A better tone in Asian credit today was offset by signs of weakness in high-yield new issues.

Sawit Sumbermas Sarana was forced to pull its planned US dollar offering last night, while Guangzhou R&F Property’s new long five-year non-call three opened half a point lower this morning.

“We made good gains this year and we are not going to put it at risk by buying a new issue in the last weeks of the year,” said a fund manager.

“We are not going to sell an old bond we like to buy a new bond that leaves nothing on the table.”

However, some recent high-yield issues regained ground after recent selling.

Indika Energy’s 2024 bonds gained three-quarters of a point today to a cash price of 98.8, and Vedanta Resources’ 2024s jumped more than a third of a point to 101.5.

The Asia ex-Japan iTraxx investment grade index was quoted at 79bp/81bp today, 1bp tighter.

“China investment grade is now looking attractive,” said the fund manager. “It has corrected from the tights around the sovereign issue and a lot of gains have been given back in the past two or three weeks.”

Chinese state-owned credits tightened ahead of the sovereign issue, but have since slipped back. The 10-year sovereign bond was bid 3bp tighter today at Treasuries plus 27bp, but that was far from its spread of Treasuries plus 15bp in late October.

Chinese asset management company bonds have widened around 30bp at the 10-year part of the curve since October. China Huarong Asset Management’s recently issued 2027s were 4bp tighter today at Treasuries plus 199bp.

ChemChina’s 2027 bonds tightened 4bp today to Treasuries plus 166bp. That is still wider than this year’s tightest level of Treasuries plus 143bp, achieved towards the end of July.

Reporting by Daniel Stanton; Editing by Vincent Baby

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