January 9, 2018 / 9:11 AM / a year ago

ASIA CREDIT CLOSE: Spreads grind in

HONG KONG, Jan 9 (IFR) - Asian credit markets were buoyed by risk appetite even as bankers signalled signs of caution as spreads grinded tighter.

The iTraxx Asia ex-Japan investment-grade CDS index narrowed 2bp to 59bp/60bp, supported by expectations of sustained demand for the region’s credits.

Kookmin’s and Woori Bank’s CDS spreads tightened 7bp and 8bp respectively, the best performers today, suggesting a recovery in demand for Korean paper, as North Korea said during talks with the South on Tuesday that it will send a delegation to the Pyeongchang Winter Olympics next month and Seoul said it was prepared to lift some sanctions temporarily to facilitate the visit if needed.

Singtel and Capitaland’s default protection costs also dropped 3bp and 5bp respectively.

Longfor Properties’ huge US$6bn order book drove the 5.25 and 10-year tranches 5bp-7bp inside final pricing in secondary markets amid hot demand for the investment-grade Chinese property developer.

Investors also chased Single B rated Times Property Holdings’ 6.6% March 2023s, which rose half a point to 99.5/100.5, according to Thomson Reuters data. The real estate company began marketing 3NC2 notes that attracted over US$2bn in orders.

Kaisa’s 7.875% 2021s and 8.5% 2022s were a quarter point higher at 98.55/98.9 and 98.3/98.5 respectively.

The constructive backdrop had some bankers suggesting that credit spreads were reaching tight levels, with one describing the market as approaching “speculative levels”.

“Investors are keen to deploy cash for fairly priced deals, but they are also aware of the large supply coming from China,” said another banker.

“NDRC approvals are also expiring in March so there is a rush by issuers that investors are willing to take advantage of.”

Reporting by Frances Yoon; Editing by Vincent Baby

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