January 12, 2017 / 11:31 PM / 7 months ago

ASIA OPEN: Risk markets seen cautious ahead of US earnings

SYDNEY, Jan 13 (IFR) - Asian risk assets may have a slight negative bias, following an overnight slippage on Wall Street where investors and traders positioned themselves ahead of the fourth-quarter earnings season that kicks off later today.

Ongoing disappointment over a lack of clarity on Donald Trump's economic and fiscal policies, plus an absence of company stock buybacks before earnings announcements contributed to respective daily declines of 0.21%, 0.32% and 0.29% in the S&P 500, Dow Jones and Nasdaq Composite.

Treasuries were well bid again on Thursday, a day after the Investment Company Institute revealed the biggest cashflow to bond funds from stock funds since the election. US two-year and 10-year yields both eased 1bp to 1.18% and 2.36%, respectively, while 30-year yields firmed 1bp to 2.96%.

European bourses were weighed down by a catch-up sell-off in healthcare stocks on Trump's criticism of pharmaceutical pricing, as well as a slide in auto shares after the Environmental Protection Agency accused Fiat Chrysler of excess diesel omissions.

With Fiat Chrysler's share price plunging over 16%, it was no surprise to see the FTSE Milan underperforming with a 1.69% slide. The DAX, CAC 40 and Spanish IBEX declined 1.07%, 0.51% and 0.01%, respectively, while the FTSE 100 managed to eke out a 0.03% increase for its record 13th successive positive session.

Gilt and Spanish 10-year yields eased 4bp and 2bp to 1.30% and 1.43%, as 10-year Bund and BTP yields rose 6bp and 4bp to 0.31% and 1.90%, respectively.

US investment-grade and high-yield CDS spreads finished unchanged and 2bp wider at 66.5bp and 354bp after Europe's main and crossover CDS spreads had climbed 1bp and 4bp to 70.5bp and 293.5bp, respectively.

PRIMARY MARKETS

The Republic of Korea (Aa2/AA/AA-) is marketing SEC-registered 10-year US dollar bonds at Treasuries plus 70bp-75bp with joint bookrunners Bank of America Merrill Lynch, Citigroup, Goldman Sachs, HSBC, JP Morgan, KDB and Samsung Securities.

Changchun Urban Development and Investment Holdings, rated Baa1 (Moody's), has set guidance at Treasuries plus 240bp for three-year Reg S US dollar bonds. CMBC International is sole global coordinator and joint bookrunner with ANZ. China Everbright Securities HK, China Merchants Securities HK and ICBC Singapore are joint lead managers.

Unrated S E A Holdings has tightened price guidance on its offering of three-year Reg S US dollar bonds to 4.5%-4.625%. Credit Suisse and HSBC are joint global coordinators and joint bookrunners with DBS, MUFG and Standard Chartered.

National Australia Bank (Aa2/AA-/AA-) has updated guidance for seven-year Samurai bonds to 12bp over yen offer-side swaps, ahead of pricing today, alongside a 10-year tranche being marketed at 17bp over. Daiwa, Nomura and SMBC Nikko are joint lead managers.

Guangzhou R&F Properties, rated BB (Fitch), is reopening its US$265m 5.75% Reg S January 12 2022s around final yield guidance of 5.95%. AMTD, Citigroup, Morgan Stanley and UBS have joined original leads Goldman Sachs, China Merchants Securities (HK), Deutsche Bank and Haitong International as joint bookrunners for the tap.

Auckland Council, rated Aa2/AA (Moody's/S&P), issued a 500m 1.0% 10-year Eurobond at mid-swaps plus 33bp, inside 40bp area guidance.

German agency Rentenbank (Aaa/AAA/AAA) is expected to tap its NZ$850m (US$590m) 5.375% April 23 2024 Kauri bond today for a minimum NZ$50m through sole lead ANZ. (Reporting by John Weavers)

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