ASIA CREDIT CLOSE: Investors take profits in the afternoon

Last Updated: Thu, Jan 10, 2013 09:50 hrs

SINGAPORE, Jan 10 (IFR) - A giddy marketplace in the morning gave way to profit-taking in the afternoon with investment-grade credits giving back some of their gains to end only some 3bp tighter in the day. The Asia iTraxx IG index, for instance, ended the session at 104bp/106bp, about 1bp wider than yesterday.

The new 3-year bonds of Kookmin Bank also ended the session about 2bp wider at 108bp/106bp over the 2-year US Treasury, still some 8bp tighter than the reoffer spread of 105bp over the 3-year US Treasury printed yesterday.

Hysan Development's new 10-year, which had traded as tight as 150bp over -- 15bp inside yesterday's reoffer spread of 165bp over -- widened gave back some gains in the afternoon closing quoted at 153bp/151bp. Sun Hung Kai's new 10-year also gave back some gains.

It had traded as tight as 155bp -- some 25bp inside the reoffer spread of 180bp and 6bp inside yesterday's close -- but it ended the day quoted at 159bp. Overall, according to one trader, IG cash bonds in Asia were closing some 2bp-3bp tighter in the day, whereas in the morning they were 5bp-6bp.

Buying continued strong on the high-yield front, though, with strong demand for Agile perpetuals lifting the perps of Shui On Land, issued last year. Those bonds ended the day some 50ct stronger at 104.25/104.625. Most names in the property space were ending some 50ct stronger, according to one analyst.

Hopson's new 5-year was the outperformer closing the session quotedc at 102.75/102.875, having priced at par yesterday.

The strong appetite for bonds in the secondary surprised one analyst, even as investors chase yields. This person said that total issuance year-to-date from the Chinese property sector is already close to half what the industry issued in dollars in all of 2012.

Total issuance in dollars from the region is approaching USD7bn too, when Australian deals are included with five live deals today. All of them, however, were seeing strong oversubscription and were poised to price through the issuers' implied curve.

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