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ASIA CREDIT CLOSE: Credits firmer ahead of Fed rate decision
December 14, 2016 / 9:10 AM / in 8 months

ASIA CREDIT CLOSE: Credits firmer ahead of Fed rate decision

HONG KONG, Dec 14 (IFR) - Asia credit markets were slightly firmer in light trading as investors awaited the US Federal Reserve's rate decision.

"We've seen flows into highly rated Asian credits in the past few days," said a Hong Kong-based investment-grade credit trader.

He noted that some investors built positions before the policy meeting, seeing that there might be limited room for US treasury yield to rise further.

"An interest rate hike has been priced in. It may look safe for some to place bets now, assuming the Fed raises rates as expected and it does not give a hawkish tone on rate outlook in the accompanying FOMC statement."

The Asia ex-Japan iTraxx IG CDS index was 1.2bp tighter today at 117bp/119bp.

Chinese policy banks and big oil names were seen tighter with China Development Bank's US$1.875% 2021s bid at 96.33 and Sinopec's US$ 2018s bid at 97.58.

The high-yield sector was relatively weaker, though new issues outperformed. Shandong Ruyi Technology Group's new US$250m 2019s gained over a point in secondary trading. The notes were issued yesterday at 98.171.

Primary markets

Guidance has been released for the senior tranches of a A$500m (US$370m) indicative offering of prime and non-conforming RMBS that speciality finance group Liberty Financial originated. Price talk for the A$100m Class A1a notes, the A$225m Class A1b notes and the A$105m Class A2 notes, with weighted-average lives of 0.40, 2.5 and 3.6 years, is one-month BBSW plus 75bp area, 145bp-150bp area and 240bp area, respectively. All three notes have Aaa ratings from Moody's.

India's Axis Bank has raised Rs35bn (US$518m) from Basel III-compliant Additional Tier 1 bonds, with a call option after five years, at 8.75%, according to filing on National Securities Depository Limited.

China Construction Bank (Asia) has obtained approval from the People's Bank of China to issue Panda bonds to raise up to Rmb6bn (US$869m). The Hong Kong-incorporated wholly owned subsidiary of China Construction Bank intends to issue the first batch of Rmb1bn three-year Pandas in the interbank bond market on Thursday.

Reporting by Ina Zhou; editing by Dharsan Singh

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