October 27, 2017 / 9:13 AM / 9 months ago

ASIA CREDIT CLOSE: China's US$ sovereign bonds rally

HONG KONG, Oct 27 (IFR) - China’s sovereign bonds rallied a day after investors who had fuelled a US$21bn order book for the US$2bn issue rushed to the secondary market to buy more of the bonds.

The US$2bn five and ten-year notes, split equally between the tranches, were last spotted at Treasuries plus 11.5bp and 12bp respectively, inside final pricing that was already deemed tight.

The 2.125% 2022s and 2.625% 2027s priced at Treasuries plus 15bp and 25bp respectively, below guidance of Treasuries plus 30bp-40bp for the five-year tranche and Treasuries plus 40bp-50bp for the 10-year.

The bond prices of Chinese SOEs such as Sinopec and State Grid rose briefly on Friday morning, but had shed the modest gains by the afternoon.

Sinopec’s April 2027s jumped almost a point at the break, but have since pared those gains and were bid at 102.2, according to Tradeweb. Sinopec’s 3.0% April 2022s shed gains and were last spotted about a third of a point lower at 100.64.

State Grid’s 3.5% 2027s were bid at 79.8bp/75.8bp.

South Korea’s US$1bn 2.75% 2027s were little changed, trading around T+66bp, but the sovereign had benefited from the rally in Chinese credits, tightening 4bp since Monday.

In frontier markets, Mongolia’s US$800m 5.625% 2023s, which also were heavily oversubscribed, were wrapped around par. Those bonds tightened 50bp during marketing on Wednesday.

Reporting by Frances Yoon; Editing by Vincent Baby

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