October 10, 2017 / 9:11 AM / a year ago

ASIA CREDIT CLOSE: IG credit rallies as funds put cash to work

SINGAPORE, Oct 10 (IFR) - Asian credit rallied today, as investors put money to work after a spate of holidays across Asia. Asia-dedicated funds saw inflows of US$800m in September, bringing the total for the year to around US$3.5bn, wrote Morgan Stanley.

“There’s a general decent IG-led trade across the board,” said a credit trader. “People came back and realised markets didn’t go to hell, so now they’re asking what they can buy.”

The Asia ex-Japan iTraxx CDS index was seen at 78bp/79bp.

“China SOEs and asset management companies that still have a little yield left in them are trading up, as well as anything that offers a pick-up, like leasing companies over banks,” said the trader.

BOC Aviation’s 2027 bonds tightened 3bp to Treasuries plus 123bp and its 2022s compressed 1bp to Treasuries plus 104bp.

Huarong Asset Management’s 2027 bonds tightened 2bp to Treasuries plus 198bp, and its 2047 notes tightened a hefty 6bp to Treasuries plus 209bp.

This year’s China bank AT1 issues were in focus, as Bank of Zhengzhou came to market offering notes at initial guidance of 5.7% area, later tightened to 5.5%.

Postal Savings Bank of China’s 4.5% AT1 was seen unchanged at a cash price of 99.8, while Bank of Qingdao’s 5.5% notes were up a tenth of a point at 100, and China Zheshang Bank’s 5.45% notes were flat at 101.9.

Reporting by Daniel Stanton; Editing by Vincent Baby

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