SINGAPORE, March 1 (IFR) - Asia credit markets were described by a few regional players as being in “consolidation mode” following the strong February rally which pulled in the JACI composite by 33bp on the month.
The market has paused for breath in the context of decent fundamentals, with the Chinese PMI coming in above estimates at 51 and US fourth quarter GDP at 3% versus an initial 2.8%.
There was residual disappointment that Bernanke didn’t greenlight QE 3, although this in itself might telegraph strong underlying US fundamentals and a reduced need to pump prime the economy.
Despite Soufun reporting that in February China property prices fell in 72 out of 100 monitored, China property counters remain resilient, led by bellwether Country Garden, which smashed through the par level yesterday on a two point rally thanks to the company placing HK$2.14m of new equity and releasing decent 2011 earnings.
The bonds were last at 100.875 bid or three eights better on the day. Meanwhile the Road King 2015s were bid at 91 or unchanged on the day despite reporting poor contract sales and contracting margins.
Recent new issuance is holding in decently, with the UOB 2017s in 1bp from reoffer at Treasuries plus 143bp bid and a fair amount of paper changing hands, given that trading accounts were well represented in the final order book.
Elsewhere in the recent primary space, the Axis Bank 2017s were in at plus 429bp or 11bp tight from reoffer. In contrast, the Wharf and Wheelock 2017s widened 5bp and 3bp respectively to plus 302bp and 360bp.
S&P lifted Noble off its review for a downgrade which boosted the company’s outstanding 2020s, which are closing out 4bp tighter at Treasuries plus 487bp bid.
The bonds have rallied 15 cash points since the company was placed on review after releasing third quarter profits, but ANZ continues to see value in the paper, given that it is trading back of industry peers Xinao Gas and New World Development.
In the new issue space, Singtel is in the market with a new 5.5-year which is rumoured to be a USD500m print with guidance set at the Treasuries plus 162.5bp area.
The strong rally in offshore China bank paper stalled today, with the Bank of China 202os unchanged at plus 260bp as was the ICBC 2021 at plus 228bp and the Bank of East Asia subordinated 2022 at plus 425bp.