HONG KONG, June 18 (IFR) - Asian credit spreads started the day on a positive note, but gave up gains in the afternoon amid market uncertainty over the roadmap the fed may unveil for reversing the US quantitative-easing programme.
The Asia iTraxx IG index widened to 135bp after moving slightly tighter than yesterday’s closing of 131bp/133bp in early trade.
“There was some buying this morning from PBs [private banks] and some real money as the 10-year US Treasury yield was stable around 2.17%,” said a Singapore-based trader.
However, uncertainty ahead of the Fed meeting which ends tomorrow kept the market on edge and flows muted.
CDS spreads widened with China at 90bp and Korea at 79 and emerging-market sovereign cash bonds were also down about 0.75 points.
Traders said the spread tightening was seen this morning mostly in Chinese and Hong Kong credits, such as Hutchison Whampoa 2022, State Grid Corp of China 2023, Sinopec 023s, but they later returned to yesterday’s closing levels.
There was some buying seen in Hainan Airlines 2020s and Yuexiu 2018s from PBs.
“We saw real money selling and the aggressive bids from the street of the last couple of days had disappeared,” according to a trader note.