ASIA CREDIT CLOSE: Spreads tighten, new issues rally in active trade

Last Updated: Tue, Nov 27, 2012 10:10 hrs

HONG KONG, Nov 27 (IFR) - Asian credits tightened steadily for the fifth straight session on Tuesday following a deal by the troika to reduce Greece's debt that moves farther away the spectrum of a default by the eurozone member. New issues dominated market attention and rallied while Olam bonds took a beating after the Muddy Waters report was released.

"Credits have been grinding tighter and volumes have picked up since the middle of last week and with new issues slowly trickling in the overall sentiment is positive," said a Singapore-based credit trader. As a result, the Asia iTraxx IG Series 18 index was a couple of basis points tighter at around 114.50bp.

China Cosco's new 10 year bonds rallied on debut to T+235bp area after pricing at T+250bp late yesterday while ICICI Bank's 2018s were quoted at T+330bp area after the Indian lender priced a USD250m tap of the bonds yesterday at T+340bp.

The outlier was Singapore commodities trader Olam, which saw the price on its 2017s drop USD5 to around 88 following a scathing 133-page report issued by short-seller Muddy Waters describing the company as a "strong sell" and suggesting there is a high risk the firm could fail.

There was also a lot of 2-way interest in Baidu and Tencent bonds. Baidu 2017s were quoted at T+137/134bp while the 22s were at T+163bp/159bp. The Tencent 2016s were at T+137bp/134bp while the 2018s were at T+212bp/202bp.

In the high yield space BB names continued to see more buying interest. Longfor 2019s were in the 103.25 area, while Sunac 17s were at 108.50, Yuzhou 17s were at 105.25 and Soho China 17s were at 98.50.

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