SINGAPORE, Nov 21 (IFR) - Trading volumes thinned in Asian
credit markets today, ahead of the Thanksgiving holidays that
start in the US tomorrow. Most of the flows were seen around the
only new issue in town from China's search engine Baidu, which
rallied in a pretty quiet but fairly positive market.
The Baidu 2017s were pushing in to 142/138bp over US
Treasuries, tighter than the 142/140bp seen on the break, while
the 2022s were seen at 175bp/170bp, a touch wider from the
171/168bp. The levels are about 10-18bbp from the issue spreads
of 160bp and 185bp that the five- and 10-year bonds priced at
One plausible reason for the strong rally could be that few
supplies are seen in Asian hands as most of the bonds were sold
into the US markets, and the under-allocated Asian bid were
trying to get their hands on some.
As the Baidu bonds firmed, it had a spillover effect on its
Chinese peer Tencent, which saw its 2016s tighten as well. The
2016s of China's biggest Internet company by revenues were
trading around T+240bp yesterday, but trades were done at 205bp
this morning and were quoted at 205/215bp by the mid-afternoon
session. The 2018s were quoted at 235/225bp.
The general positive sentiments in the Asian markets as well
as Olam's vigorous defence of its integrity probably lifted its
2017s to 93/94, almost back to where the bonds were before Muddy
Waters created a ruckus with its negative comments on the
commodities trading company.
Olam held a bondholder conference call earlier today,
details of which were unknown but it injected some confidence
back into its bonds. That confidence was also fed by some
analyst reports which today concluded that Olam was unlikely to
collapse, contrary to the view of Muddy Waters.
"There was a bit of a wobble during lunchtime when news that
European officials failed to reach an agreement on Greece
emerged but the markets managed to shake that off," said one
Singapore-based credit analyst.
It was a more active day at the credit spreads in Asia with
brisk two-way flows dominated by fast money although it would
have been hard to tell from the marginal tightening in credit
The Asia iTraxx IG 18 pushed in 2bp to 120/122bp by the end
of the day with the more liquid benchmark sovereigns seeing a
3bp tightening in the Philippines, Indonesia and Vietnam to
100/105bp, 125/130bp and 198/208bp.