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ASIA CREDIT CLOSE: Yield chasers buoy Indian credits
July 29, 2016 / 9:11 AM / a year ago

ASIA CREDIT CLOSE: Yield chasers buoy Indian credits

HONG KONG, July 29 (IFR) - Adani Transmission’s US$500m 10-year debut popped on its first day of trading, underlining once again the strong bid for Asian emerging-market debt with relatively high yields as the region continues to attract massive inflows from global investors.

The new senior secured bonds tightened 25bp in Asia morning hours, surprising both bankers and investors who assessed fair value well above secondary indications that bid the bonds as tight as T+235bp.

The momentum spilled into Adani Ports SEZ’s 3.5% 2020s, which were used as a main comparable but deemed a weaker credit from a fundamental perspective due to outlook revisions to negative from stable from Moody’s and S&P in May.

Adani Port’s bonds jumped half a point before settling back to 100.1/100.55, according to Tradeweb.

Export-Import Bank of India’s US$1bn 10-year trade not only repriced the 10-year financial space and helped flatten curves, but also traded 5bp tighter in the aftermarket.

ONGC Videsh’s 3.75% 2026s, which recently priced at an aggressive 220bp over US Treasuries, were bid at 211bp by Friday afternoon, Tradeweb data showed.

The impressive outperformance of recent transactions, particularly from India, comes as compressed yields fuel a buyside race for opportunities to earn higher returns.

Asia’s investment-grade CDS was trading at 119bp/121bp, the tightest level since last August.

Asia ex-Japan investment grade corporate and financial spreads are now flat on the year at T+214bp, rallying 41bp since the Lunar New Year, but are underperforming compared to sovereigns and high yield, which are 136bp and 205bp tighter respectively, according to an ANZ credit report, suggesting that there may be more room for spreads to tighten.

Reporting by Frances Yoon; Editing by Vincent Baby

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