SINGAPORE, March 11 (IFR) - There was a broadly constructive
tone in Asian credit markets today, although some skittishness
is emerging towards the future direction of US Treasury yields.
Some market participants see the 2.15% yield point on the
10-year Treasury as a tipping point when large-scale convexity
selling is likely to emerge with the potential to initiate a
spike in yields.
The unexpectedly strong 263,000 addition to US non-farm
payrolls in February and a decline in the unemployment rate
helped push up 10-year yields 5bp, close to a 12 month high.
There was a further 1bp rise in Asia today.
Against this background, although secondary Asia credit is
mostly unchanged to moderately better bid today, it is
unsurprising that just one deal that of Wheelock Properties is
live in the primary market.
Also, the primary Asia G3 market has to absorb new paper of
USD4.8bn brought last week and it is not surprising to see
issuance taking a breather. In generally illiquid trading
conditions, the Asia iTraxx IG Index is 1bp tighter at
Last week's new issuance looks to have been appropriately
priced for the most part, with the big deals for Bharti Airtel
(USD1bn) and China Vanke (USD800m) holding up. Bharti was last
up at 101.375 bid off a par reoffer, while Vanke was in at
Treasuries plus 186bp bid from a plus 195bp reoffer. Still, both
were mostly unchanged in the day.
Asian credit markets are also keeping a wary eye on China's
macroeconomic data with weekend releases of CPI, retail sales
and bank lending disappointing and fears are growing that a
policy tightening is around the corner.