SINGAPORE, Jan 9 (IFR) - Asian credit markets are humming
along nicely with all eyes trained on a continual flow of
announcements of new roadshows and deals.
Newly priced issues from China high-yield and Hong Kong
property credits are outperforming credit spreads and that is
drawing more similar names out.
Hysan Development and ICTSI have tightened guidance on their
new deals, expected to price by the end of today, after
reporting books that were multiple times oversubscribed. That
kind of demand is also reflected in the secondary bond markets.
The two best performers have been Kaisa's 2020s that priced
at par and have since climbed to 105.25/105 today, as well as
Sun Hung Kai's 2023s which were quoted at 164/161bp versus the
issue price of 180bp.
Country Garden's new 2023s were seen at 102.75/103.25
against its issue price at par, although Shimao 2020s are
hovering at par, where the bonds were issued at.
But if the performance of Kookmin Bank's newly priced 2016s
is any indication, buyers in the secondary markets are not just
throwing money at anything.
Kookmin Bank priced the USD300m three-year deal at 105bp
over US Treasuries yesterday, 20bp inside its initial guidance.
The new notes are still at par, trading at 107bp/104bp, a
reflection of how tight its pricing had been.
Even if new issuers took notes from that flat performance,
they have probably thrown them out of the window as the new
deals that are likely to price today have already compressed
guidance sharply. Hysan has squeezed guidance by 20bp to 170bp
and ICTSI by 37.5bp to 4.875%.
Despite that, the markets expect both deals to do well in
the current risk-on environment. The question is how long can
the rally run.
"This rally still has legs for another two months," said a
credit analyst. "There is still enough juice in the markets and
people do not want to be caught again, hence the reluctance for
a sell-off. If there is any sell-off, it will be a very
Other analysts believe that the outperformance of bonds will
be maintained at least until the end of January, driven by huge
fund inflows in the last couple of months when issuance was
quiet. EPFR data shows that EM bonds have seen inflows of
USD52bn in the first 11 months of 2012.
With all attention focused on new bonds, Asian credit
spreads have stayed flattish and lackluster at 103/105bp today,
unchanged from yesterday, although it has widened from 101bp on
Monday. Indonesia's CDS were indicated at 133bp while
Philippines were at 97bp.