April 28, 2017 / 9:14 AM / 4 months ago

ASIA CREDIT CLOSE: Credits move sideways; new issues performance mixed

HONG KONG, April 28 (IFR) - Asian credits moved sideways Friday ahead of month-end with trading continuing to concentrate on new issues.

The iTraxx Asia investment-grade index was largely flat and indicated at 93bp/94bp.

"Recent heavy new issues supply and tight pricings have roiled market sentiment. New issues, in general, have not performed well," a Hong-based trader from a Chinese bank said.

China Southern Power Grid overnight managed to price its debut US$1.5bn dual-tranche dollar bond offering despite coming right after a jumbo US$5bn four-tranche new issue from larger peer State Grid Corporation of China a day earlier.

Southern Grid's newly priced five-year bonds traded flat in the secondary market while its 10-year bonds traded 2bp-3bp tighter.

State Grid's new bonds regained about 1bp-2bp Friday from yesterday, but were still wider than their reoffer levels.

Performance of other new issues was mixed with bonds from China Minsheng Banking's Hong Kong branch trading 3bp-4bp wider while Suncorp-Metway traded 2bp tighter.

In high yield, SOCAM Development's newly issued 6.25% three-year bonds gained and were trading at a cash price of 100.6/100.7.

Chinese aluminium producer China Hongqiao's 7.625% 2017s were flat and its 6.875% 2018s were bid at 97.40 versus 97.125 late yesterday, despite Fitch downgrading its ratings by two notches to B+ from BB with Rating Watch Negative outlook.

Hongqiao's management has commented in a media interview that the group has sufficient funds to redeem the US$400m 2017s due on June 26.

Lucror Analytics maintained "not recommended" on Hongqiao notes due to corporate governance risk.

Reporting by Carol Chan; Editing by Vincent Baby

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