August 31, 2017 / 9:17 AM / a year ago

ASIA CREDIT CLOSE: Factory growth drives China CDS tighter

HONG KONG, Aug 31 (IFR) - CDS spreads for Chinese issuers tightened after the country’s factory growth beat expectations.

Five-year credit default swaps for Bank of China, China Development Bank and the China sovereign tightened 7bp, 2bp and 1bp, according to Thomson Reuters data.

The gains follow official Purchasing Managers’ Index (PMI) results released on Thursday, which rose to 51.7 in August, beating a Reuters poll of 51.3.

A separate industry survey showed that the steel sector expanded at the fastest pace since April 2016, Reuters reported.

Hong Kong issuers such as Hutchison Whampoa and Swire Pacific also saw CDS costs tighten aggressively at 8bp and 5bp respectively.

In Korea, fears of an escalating North Korean missile crisis continued to abate, driving the country’s CDS costs 4bp tighter.

The Asian investment-grade CDS index is now trading at the tightest level since the financial crisis.

The regional index was cited 1bp tighter from yesterday at 76bp/77bp, extending gains after a temporary blip from North Korean missile tensions mid-month.

Indian mining and energy group Vedanta Resources’ latest seven non-call four bonds were trading at their highest since they were issued at the beginning of the month.

The 6.125% 2024s are trading up a fifth of a point to 100.90/101.350, according to Thomson Reuters data, shrugging off a weak secondary performance in the first few days after pricing.

The company has named a former CEO as interim lead to replace Tom Albanese, who is leaving the company today.

In China, eHi Car Services’ 5.875% 2022s were up a third of a point to 101.843/102.190. Yields on Country Garden’s 4.75% 2022s extended gains even after the real estate developer raised an extra US$100m on August 9.

Cogard’s bonds were trading at 4.65%, near the recent tight of 4.62% reached August 29.

Reporting by Frances Yoon; Editing by Vincent Baby

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