September 6, 2017 / 8:08 AM / a year ago

ASIA CREDIT CLOSE: Korean credits pressured on heightened Korean tension

SINGAPORE, Sept 6 (IFR) - Asian credits were marginally weaker today amid heightened geopolitical tensions stemming from concerns over further North Korean nuclear tests.

The iTraxx Asia investment-grade index widened 1bp to 80bp/81bp, but South Korea’s five-year CDS pushed out 4bp to 70bp/72bp.

The indices for Korean policy banks also widened with KDB’s CDS widening 6bp at 71bp/76bp, while Kexim’s CDS gapped out 7bp to 71bp/76bp.

Korean cash bonds were also hit, widening about 5bp. Hyundai Capital’s recently priced 3% 2022s were seen at 137bp/132bp, around reoffer spread of 135bp, but the longer-dated 3.62% 2027s widened more substantially to 162bp/160bp against reoffer spread of 155bp.

Lotte Shopping, which sold 2020s last Thursday at 105bp, saw the notes weaken to 109bp/103.5bp.

“No cash is going into Korean credits, no one wants to take on their risk right now,” said one credit trader.

Other cash bonds were holding up as Sun Hung Kai’s 4.65% due 2022s were quoted at 100.6/101.00 against a reoffer at par.

Cheung Kong Infrastructure’s fixed-for-life perpetual notes were a touch lower at 99.75/100.2 after a minimal gain on Monday to 100.5.

Reporting by Kit Yin Boey; Editing by Dharsan Singh

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