HONG KONG, Dec 8 (IFR) - Asian credit markets continued their surprising rally, even though US Federal Reserve meetings and a widely expected interest rate increase are only days away.
The iTraxx Asia ex-Japan investment-grade was spotted over 3bp tighter at 116.00/118.00, approaching its pre-US election levels.
Asian CDS surged to nearly 136.00 in the days after November 8. Prices have been volatile, but have been on a steadily tightening trend in the last three weeks.
Although traders expressed some surprise over the market sentiment, they said impressive trade figures out of China were encouraging.
“I was surprised to see this today,” said a Singapore-based IG bonds trader. “Nobody seems to care about the Fed, so this rally has been unexpected. At the same time, though, volumes haven’t been huge and liquidity doesn’t feel great.”
The rally was strongly felt in the sovereign segment, with Indonesian spreads about 8bp tighter. Philippines 2041 bonds were over a point higher according to Tradeweb.
Some recent high-yield issuers also enjoyed a constructive session. Studio City’s 2021 US dollar bonds were up almost half a point and being bid at 105.125 after issuing two weeks ago at par.
Primary markets also fed off the more bullish tone as Chinese issuers marketed three US dollar deals.
Syndicate bankers suggested that there was some hurry to get deals done before the end of the year, as many investors have already stopped buying new issues.
Reporting by Spencer Anderson; editing by Dharsan Singh