ASIA CREDIT CLOSE: Asian credits marginally higher, await cues from Europe, US

Last Updated: Wed, Jan 02, 2013 08:30 hrs

SINGAPORE, Jan 2 (IFR) - News in the morning that the fiscal cliff crisis in the US has been averted for now pushed Asian financial markets higher, but credits lagged equities which are sharply higher in Asia. Korean shares are at a nine-month high, but in Asian credits, liquidity remained very thin.

"It's very quiet out there," said a debt syndicate banker. "We are only seeing a few bids and offers but nothing has been done. It looks like players are testing markets and levels on the first trading day of the new year, and are just waiting for Europe and New York to open for fresh leads."

The iTraxx IG index was heard at 108/110bp with levels moving towards the tight end of the range as the afternoon session wore on. Sentiments are biased to the cautious optimism with China's December official manufacturing PMI coming in at 50.6, although the HSBC PMI released on December 31 was a stronger 51.5, indicating that the economy was slowly picking up.

A resolution the US fiscal cliff talks will add a positive spin to the markets, although a decision on spending cuts will be delayed by two months.

"You are going to see a rush to the markets over the next two months as issuers try to push into this window," said the banker.

Cash bonds inched about 1bp higher although the bulk of the bonds were unchanged.

"The markets are expecting supplies pretty soon, and street talk is that China property names are looking around," said one trader. Names being bandied about included Country Garden and Agile.

DCM bankers are likely to wait for how European and US markets react to the fiscal cliff resolution before taking the next step. If the markets react positively and stay stable, deals could be launched as soon as tomorrow, and that could spark some life into the moribund secondary markets.

As it is, the last deal that was sold in 2012 - the Zoomlion 2022s are at 101.5/101.3, up from its reoffer price of 98.625. Shui On perps have also rallied to 103.25/104 from its issue price of 101.25.

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