SINGAPORE, Aug 29 (IFR) - Credit tightened in the region today as cash bonds were better bid and CDS levels dropped, but trading was very slim as investors held tight to their positions towards the month’s end.
“Nobody wants to fiddle with their positions; they just want to wait for the month’s end,” said one trader in Singapore.
However, amid very low liquidity conditions, persistent demand from retail accounts and some institutional window-dressing saw cash spreads contract some 2bp on average.
India remained the main target of buying and most of the benchmarks there were being quoted some 3bp-4bp tighter with SBI 2018s last bid at 330bp.
Indonesia’s dollar bonds were better bid in the wake of the central bank’s 50bp hike to 7% of the benchmark rate, but did not rally heavily either. The 2023s were quoted at 93.50, some 25ct higher in price in the day, while the 2043s were at 70.50/71.50, also some 25ct stronger.
Bank Indonesia’s move did help boost international confidence in the country and the Jakarta Stock Exchange was closing the day 1.3% higher, while the rupiah stopped losing ground and ended the day unchanged at IDR10,930/USD.
However, again, bond traders said investors were being careful about not meddling too much with their positions and, consequently, not much buying was seen in the Indonesian dollar bonds.
“I actually expect some people to take advantage and take profit,” said one trader in Singapore.
The sovereign CDS was ending some 4bp tighter, helping the iTraxx Asia ex-Japan IG index tighten the same amount to close at 164bp. Philippines also ended the day tighter boosting the index.
Again, though, as one trader said: “Flows were very light, everyone is just watching for the end of the month.”