February 12, 2018 / 8:28 AM / 8 months ago

ASIA CREDIT CLOSE: Credit stable, HY sector weaker

HONG KONG, Feb 12 (IFR) - Asian credit markets were stable in thin trade on Monday as some investors were setting off for the Lunar New Year holiday.

“We saw two-way flows in the market today with interest focused on short-end notes, while the long-end notes were still under pressure,” said a Hong Kong-based credit trader.

The iTraxx Asia ex-Japan investment-grade CDS index was 0.5bp tighter at 75.4bp/76.6bp. Chinese sovereign five-year CDS was marginally tighter at 64.2bp/66.7bp.

Sentiment towards Chinese high-yield names weakened after the state planner made changes to outbound investment rules on Sunday.

The National Development and Reform Commission included news media and weapons development in its list of “sensitive” sectors for offshore investment.

The list maintained restrictions on offshore investments in real estate, hotels, motion picture studios and sports clubs.

Traders said the new rule might renew worries over Chinese companies that have been making aggressive acquisitions overseas in the past few years.

HNA Group’s 8.875% 2018s were little changed, being bid at a cash price of 95.5 after the news that China Citic Bank Corp had extended a Rmb20bn credit facility.

On Friday, HNA Group said it had paid a US$9m coupon on its US$300m 6% 2019 bonds in advance.

Shandong Ruyi’s 2019s were bid at a cash price of 100.02. The paper was bid as high as 100.30 last Friday following an announcement that the textile and apparel maker had agreed to buy a controlling stake in Swiss luxury shoes and accessories firm Bally from Luxembourg-based JAB Holding.

Ronshine China’s 8.25% 2021s were being bid at 97.12 in cash price. Sinochem’s new Dim Sum bonds due February 2021 were quoted slightly above par at 100.05.

Reporting by Ina Zhou; Editing by Vincent Baby

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