January 8, 2018 / 9:24 AM / a year ago

ASIA CREDIT CLOSE-Sovereigns outperform corporate paper in wary market

SINGAPORE, Jan 8 (IFR) - Asian sovereign bonds traded better than corporate paper today, with China’s recent dollar issue trading close to US Treasuries.

Its 2022 bonds were bid at Treasuries plus 3bp according to Tradeweb, tightening 7bp today and 15bp since the end of last year. China’s 2027 bonds tightened 5bp to Treasuries plus 21bp, compressing 11bp since the end of December.

“Some of the Asian sovereigns will outperform,” said a credit trader. “It’s not as though China is going to come out with a new issue tomorrow.”

Indonesia’s 2027 bonds tightened 5bp to Treasuries plus 101bp, and Korea’s 2027s compressed 4bp to Treasuries plus 57bp.

The Asia ex-Japan iTraxx investment-grade CDS index tightened almost 2bp to 61.65bp/62.65bp.

“People are very wary,” said the trader. “Everywhere you look there is evidence of froth, but the market continues to look the same as it did at the end of last year and nothing has really happened. 2013 started in a similar way.”

Swire Properties’ 2028 bonds were flat at Treasuries plus 109bp, having tightened 1bp since pricing on January 3. ICICI Bank’s 2027 bonds tightened 4bp to Treasuries plus 148bp.

Reliance Communications’ 2020 bonds were quoted at a cash price of 66.6, according to Tradeweb, having bounced back after the announcement on December 28 that it would sell wireless assets to Reliance Jio Infocomm.

RCom exited its strategic debt restructuring without imposing a haircut on creditors and will cut its debt through asset sales. The 2020s had been bid at 36.8 on December 22.

Noble Group’s 2022s were bid at 38.5. It faces a shareholder vote on January 25 on a waiver to allow vessel sales, and then a coupon payment on its US$1.209bn 6.75% 2020 bonds on January 29.

Garuda Indonesia’s 2020 sukuk was bid at a cash price of 101.5 to yield 5.3%, after it said in December it was considering an offshore bond offering.

Country Garden’s 7.5% 2020 bonds callable in 2018 were bid at 104.2 to yield 4.4%, after it mandated banks for a new issue.

Reporting by Daniel Stanton; Editing by Vincent Baby

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