SINGAPORE, Dec 5 (IFR) - Asian credit markets were
marginally weaker today, despite firmer sentiment in regional
Bankers reported that trade volumes were thin today, with
only a few brokers quoting prices. That thin liquidity meant
that a single trade would have the effect of moving prices
The iTraxx Asia IG index pushed out to 112/114bp, nearly 4bp
from 109bp quoted last evening. The CDS for Indonesia was
indicated at 120/125bp while the Philippines was seen at
In the bond space, a newly priced deal from Keppel Land and
a re-tap from Citic Pacific were in focus today, but brewing
political problems in Mongolia had a huge impact on the USD1.5bn
six-year and 10-year bonds that were coincidentally issued
Mongolia bonds plunged today, dropping USD7-USD8 in price
following news that the Mongolian People's Revolutionary Party
was going to quit the governing coalition. Chinese news agency
Xinhua reported that MPRP secretary G Byambasuren said the party
made the decision at a meeting held by its executive bureau
The negative headlines put pressure on the new bonds the
sovereign sold just last week. The USD500m 2018 notes were
priced at 99.996 to yield 4.125% while the USD1bn 10-year bonds
priced at par to yield 5.125%.
As a result of the news, fast money accounts were heard
selling the bonds - the 10-year was being quoted around 93.00
while the 5-year was around 94.00, sliding from trade levels of
as high as 101.50 for both tranches almost a week ago.
Keppel Land's debut seven-year bonds also suffered from the
general soft sentiments after pricing overnight at a tight 220bp
over US Treasuries. The bonds opened to trade amid huge
confusion over whether the bonds were going to be quoted over
the more liquid five-year or 10-year Treasuries, rather than the
less conventional 7-year rates.
Hence, the bonds were quoted at 240bp over 7-year Treasuries
on the break, but by late morning, the leads had started quoting
over the 5-year Treasuries.
At 220bp over 7-year Treasuries, the pricing would be
equivalent to about 262bp over 5-year Treasuries. By
mid-afternoon, the bonds were still wide at 275bp over 5-year
UST. Rival bankers and investors blamed it on the tight pricing,
which came flat to inside to comps but banks close to the deal
said the widening was in line with the weaker credit conditions.
That argument seems supported by Citic Pacific, which did a
re-tap of its 2023s yesterday at 101. The bonds were quoted at
100.50/101.50, flat to where it priced at reoffer.
High-yield credits are also a touch lower, although credit
analysts see the HY sector moving sideways for the rest of the
"We may see some rotation out of the very tight names either
to be kept as cash for the coming year, or into some of the
wider names out there, or those which have been affected by
event risk," said one Singapore-based analyst.
Shui On Land's perpetuals were seen at 100.125/100.5 today,
slipping from yesterday's 100.2/100.4, while Soho China's 2017s
slid to 98 and the 2022s to 97, down from the reoffer price at
Another high-yield bond that softened were Olam's 2017s,
which have pushed down to 88/90 as investors showed their
unhappiness over its newest USD1.2bn bonds-cum-warrants issue
that had market players puzzled over the company's overall
strategies. Shareholders also showed their dismay as its stock
price has tumbled almost 6% today.