January 26, 2018 / 8:39 AM / a year ago

ASIA CREDIT CLOSE: Market quiet; Chinese AMCs stabilise

HONG KONG, Jan 26 (IFR) - There was relatively quiet trading in the Asian credit market on Friday in the absence of new offerings, while credit spreads were little changed.

The 10-year bonds of Chinese asset-management companies were stable after heavy selling in the past few days on potential new multi-tranche supply from China Cinda Asset Management and a spike in Treasury yields, said a Hong Kong-based trader.

Chinese AMC’s 10-year bonds, in general, widened 5bp-6bp in the past two days.

The iTraxx Asia ex-Japan investment-grade index was spotted 2bp tighter at 63.25bp/63.75bp.

Pakistan’s 6.875% 2027s, which the south Asian country issued last month, traded down 0.23 point to 101.58 in the past two days.

Fitch yesterday revised Pakistan’s B rating outlook to negative from stable to reflect its “high public debt/GDP ratio, weak governance standards as measured by World Bank indicators, domestic political and security risks and a fragile external position, which are balanced by relatively strong growth”.

Nomura said Pakistan’s 2027s valuations now looked fair, but, considering that political and economic pressures on the sovereign, remained acute. As such, Nomura has shifted to a “neutral stance” on the bonds from “small overweight”.

Meanwhile, performances of new issues, priced overnight, were mix.

Export-Import Bank of India’s US$1bn 3.875% 10-year were 1bp-2bp tighter from reoffer of 125bp over Treasuries.

BOC Aviation’s 3.50% US$300m 5-year notes, priced at 115bp over Treasuries, were 1bp wider.

Chinese state-backed technology company Tsinghua Unigroup’s US$1.85bn three-part bonds initially saw some selling pressure, but later bounced back to reoffer levels.

Reporting by Carol Chan; Editing by Dharsan Singh

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