TOKYO, Oct. 15 (IFR) - The primary market continues to hog
the attention of traders, with actual secondary trading very
scant as brokers followed the headline flow of new issues.
Likewise, most of the two-way activity done on the more recent
bonds, which are still seeing position-shifting.
The unrated five-year bonds of Regal Hotels, for one,
started the day trading below reoffer but later recovered and
were quoted last at 99.40/99.65. The bonds priced on Friday at
The technicals remain positive, though, with research firm
EPFR having reported another week of strong inflows into EM bond
funds last week. The asset class saw USD1.7bn in net inflows in
the week ended October 10.
In response to the growing demand, though, supply continues
to hit the screens and today it was the turn of Korea
Expressway, which is out with a five-year USD bond. Many other
deals, a few in the high-yield space, are preparing to launch
later in the week.
There was some movement on the CDS side as well, as the Asia
iTraxx IG series 18 tightened 1bp to close the session quoted at
126bp/128bp. The move seemed to be more of a reflection of the
equity markets, which ended the session slightly stronger
following positive economic news from China.
Philippines protection outperformed the index a bit,
tightening 2bp to 104bp-109bp as some investors sold protection
following the announcement that the government had signed a
peace agreement with Muslim rebels in the province of Mindanao.
The headline came late in the session and had a marginal effect
on trading though. as much of the market had already priced-in
In an interview with IFR, though, the funding manager for
the Philippines was quite bullish about the peace treaty with
the rebels in Mindanao. When the Mindanao region is better
integrated, "the potential for contributing to the Philippines
economy is huge," Tan told IFR during a meeting on Saturday.
Market players, however, shrugged the news as just another
positive headline from a sovereign that has been improving its
credit metrics steadily for the past five years.
Indeed, five-year CDS for Indonesia was also 2bp tighter in
the day, while China, Malaysia and South Korea were 1bp tighter
at the close. Apart from the CDS moves, there was little to
write home about in terms of trading in investment-grade
credits. "It was a very sleepy day, I spent most of it catching
up with admin stuff," said a distribution banker.
There were a couple of trades on the high-yield front, but
nothing eye-catching. The exception probably being the bonds of
China Oriental, which had dropped to 83.50 last week but
recovered to 85.50/86.50 following the announcement that the
company is doing a Dutch auction for up to USD100m of its
outstanding 7% 2017s.
The price range on the tender is from 84.50-88.00, so
investors started to bid the bonds up in an attempt at getting a
higher price on the buyback.
Lippo Karawaci, which also announced a tender for its 2015s
alongside a USD100m reopening of its 2017s, did not move on the