August 13, 2014 / 2:27 AM / 4 years ago

CORRECTED-ASIA CREDIT CLOSE: Credits in better tone, thanks to decent results

(Corrects ownership of Berau Coal in 7th paragraph.)

HONG KONG, Aug 12 (IFR) - Asian credits remained in better tone today after yesterday’s rebound in secondary trading. In the absence of unsettling news from the Ukrainian front, decent performance results from Chinese listed companies helped sentiment during a light session.

In fact, Chinese credits shone with both investment-grade and high-yield names tightening 2bp-5bp today. Major SOEs, such as CNOOC, State Grid and Sinopec, were pursued, while Chioli and Greenland were also favoured.

Sinopec’s 4.375% 2024s were firmer at 3.908%/3.843% today from 3.919% yesterday. Country Garden’s 7.25% 2021s strengthened today to yield 7.49%/7.393% from 7.558% yesterday. Wanda Properties’ 2018s were better at 4.533%/4.451% from 4.67%.

In general, high-yield Chinese property credits were also well supported with more provinces and cities relaxing bans on non-first-time house purchases.

On the new issue side, Hai Chao Trading is still marketing a USD300m offering of 3-year Reg S floating-rate notes at a yield of 170bp area over 3-month Libor announced last Friday. The order book remained open today, with the Standard Chartered Bank-led issue expected to price tomorrow.

Also in the market is Berau Coal Energy, which continued to build books today for its offering of 5-year non-call 3 bonds indicated to yield in the area of 10.5%.

“Investors want to take more time as credit markets have been volatile,” said a banker on the Berau Coal deal. Others spoke of their concerns over the company’s weak corporate governance record after Berau’s London-listed parent Bumi PLC reported unexplained expenses last year. Bumi PLC has since been renamed Asia Resource Minerals.

The Berau 7.25% 2017s, a major comp for pricing, was trading at 94/95 on a cash-price basis, which equates to a yield of 9.7%. Fair value would be around the 10.4% area, considering that the curve differential between a 3-year and 5-year is around 70bp.

Indonesia’s 2044s were little changed at 5.538%/5.507% today from 5.551% yesterday. Pertamina’s 2044s widened slightly to yield 6.346%/6.31% from 6.336%.

Indian bonds were mixed today. Bharti Airtel’s 2024s strengthened to yield 4.783%/4.69% today from4.661% yesterday. ONGC’s 4.625% 2024s were quoted at 4.752%/4.679% from 4.751%. IDBI’s 5% 2019s were quoted at 4.299%/4.153% from 4.379% previously.

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