May 24, 2017 / 8:37 AM / 6 months ago

ASIA CREDIT CLOSE: China downgrade, RComm slide weigh on sentiment

SINGAPORE, May 24 (IFR) - A sharp plunge saw Reliance Communications’ 2020 bonds become the underperformer of the day, though other high-yield credits were more resilient as the overall sector widened just 1bp-2bp.

The RComm 2020s were last quoted at a bid of 65.258, according to Tradeweb, down from yesterday’s 85.00.

Reliance’s bonds had been under pressure after press reports said there had been a delay in the company’s repayment of rupee loans.

“This is a bond that is very retail driven and, with appetite in recent months high for risk assets, any risk in RComm’s bonds was not taken seriously,” said a Singapore-based trader.

In contrast, Noble Group’s bonds rebounded about 2 points today after the company injected a bit of positive news that it was in ongoing talks with potential strategic investors and had hired advisers on strategic alternatives. Its 2022s were seen at a bid of 42.00.

News of a Moody’s downgrade in China’s rating from AA3 to A1 only had a temporary impact, sending Chinese credits wider at the open. However, calm was soon restored as losses were erased and credits bounced back.

“Due to the choppy start, the market is more cautious and the Chinese high-yield credits are about a quarter to half a point lower,” said one high-yield trader. “In general, though, the downgrade had minimal impact on the high-yield bonds.”

The newly printed 2022s of Beijing Gas, priced yesterday at reoffer spread of 116bp over US Treasuries, were quoted 5bp-6bp wider in the morning and hovered at these levels thereafter.

CC’s 2020s were still holding on to gains at 151bp/148bp, inside reoffer spread of 155bp.

Recent perpetual bonds were not performing well with Nan Fung’s perps under water at 98.50/99.00.

Reporting by Kit Yin Boey; editing by Dharsan Singh

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