March 13, 2017 / 8:58 AM / 10 months ago

ASIA CREDIT CLOSE: Credit tighter on growth hopes, as China HY rallies

SINGAPORE, March 13 (IFR) - Asian CDS tightened 3bp today, as better-than-expected US non-farm payrolls on Friday put the focus on global growth. The Asia ex-Japan iTraxx investment-grade index was seen at 93bp/94bp.

Rates had already been expected to rise after this week’s Federal Reserve meeting, and the strong data means that now looks like a formality.

Relative tightening has been seen at the short end of the Asian credit curve, but some longer-dated bonds have widened. China Cinda Asset Management’s recent multi-tranche issue showed mixed performance.

Its 2020s and 2022s have tightened by 27bp and 23bp, respectively, since pricing on March 3, in Treasury spread terms, but its 2024 and 2027 bonds are both 9bp wider.

Chinese computer company Lenovo, which is unrated but viewed as an investment-grade credit, saw its 2022 bonds at Treasuries plus 180bp today, recovering to the issue spread after widening slightly last week.

Last week’s stutter in the high-yield rally provided a buying opportunity today.

“Everyone is buying everything,” said a high-yield trader. “People have been waiting for the right moment to buy, and this is it.”

That appetite seemed to be particularly strong in the Chinese property sector, with China South City’s three-year bonds jumping half a point, but a few other credits were excluded from the buying.

Noble Group’s new 2022 bonds were flat at a cash price of 96.6 today, yielding 9.6%. That marked a 3-point drop in a week from the offer price of par.

Singapore-based Olam International’s 2023s were a shade lower at a cash price of 98.5, having been sold at 99.37 at the start of the month.

Indonesian developer Pakuwon Jati’s 2024s callable in 2021 were a third of a point lower today, at 96.6, yielding 5.6%. Those bonds had also been issued at par.

Reporting by Daniel Stanton; Editing by Vincent Baby

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