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ASIA CREDIT CLOSE: Another day of scant volume as markets eye G7
June 5, 2012 / 9:17 AM / 6 years ago

ASIA CREDIT CLOSE: Another day of scant volume as markets eye G7

SINGAPORE, June 5 (IFR) - Asian credit markets were slightly better bid amid thin trade flow, with retail said to have been nibbling at the lower end of the credit curve, albeit with little material impact on spreads.

London’s closure for the second day of the Jubilee holiday has again crimped Asian trading down to thin trickle, with bid/offers widening out and traders’ runs on the scant side.

All eyes now are tonight’s G7 meeting, with plenty of players speculating that the possible convincing of Germany to accept the long proposed Eurobond common issuance solution will be a game changer.

Still with weakness looming over the China and Indian economies and the eurozone economies unlikely to reverse course in the short run, it’s difficult to advance a convincing argument for bullishness on Asian credit.

The Asia series 17 iTraxx index is closing out 4bp tighter on the day, at 205bp/207bp having shed 1bp of gains from the open and basically flat-lined for most of the day.

Once again the Hong Kong Land newly minted 2017s were in the spotlight, following yesterday’s mini meltdown, with the paper pulling in 5bp today to close out at Treasuries plus 293bp bid, although some way off the bond’s tightest plus 277bp bid.

Retail was said to have bottom fished the deal, as it did today with the Agile 2017s, which bumped up a half to 96 bid.

A similar dynamic applied to the KWG Land 2017s which added a half to 93.5 bid. Sentiment is slightly better in the China property complex on the back of better than expected contract sales for May, although there is widespread caution towards the sector based on a continuing decline in China credit growth.

According to Fitch, PRC credit growth is set to fall in 2012, for the first outright decline since 2008.

Meanwhile a report in today’s Financial Times calling in to question Zoomlion’s business model and drawing attention to a planned USD22bn-equivalent credit line for the PRC heavy equipment manufacturer had no impact on the company’s due 2017 bond which was issued at the end of March. It is closing out unchanged at 99 bid amid deep illiquidity.

jonathan.rogers@thomsonreuters.com

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