SINGAPORE, Feb 24 (IFR) - A selloff in Chinese property
stocks spilled over to credit markets and most of the names in
the sector ended the session USD0.50-USD1.00 weaker in price
The Shanghai Stock Exchange's property sub-index fell 5.44%
today amid reports that some onshore banks were cutting credit
lines to developers.
The fears of a liquidity squeeze involving the sector
prompted investors to sell their bonds and even the likes of
Country Garden ended the day weaker. The 2018 bonds of what is
one of the largest developers in China closed quoted at 110.00,
or about 50 cents weaker for the day.
Single-B property names were underperforming, but investors
trying to sell some of the weaker players, such as Fantasia,
were hard-pressed to find bids. More liquid Single B names, such
as Kaisa Group, bore the brunt instead and the company's 2020s
closed USD1 weaker in price terms quoted at 101.00.
The selloff in Chinese property stocks, the biggest
component of the JP Morgan High-Yield Asian Credit Index, also
dragged down other high-yield bonds, albeit not as far.
According to one analyst, high-yield bonds from other parts of
Asia ended the session roughly 15 cents to 25 cents weaker.
The selling pressure, however, was not felt on the
investment-grade side. Indonesia's 2024s dropped about 50 cents
in the morning, after the sovereign announced it was doing a
non-deal roadshow, but they bounced back and closed the day
about 15 cents higher in price quoted at 105.15/105.50. The
longer end, however, still remained a bit heavy, closing the
session some 15ct weaker in price terms, quoted at
"Even the stuff that is weaker, though, is in high demand,"
said a trader in Singapore. "There is a lot of demand for cash
bonds right now as supply has completely underwhelmed the
If Asian accounts were still keen on buying bonds, CDS was
suffering a bit, partly as a result of fears that the Ukraine
will default on its debt.
The trader said that he heard more people buying Chinese CDS
as they hedged against a potential spike in spreads in case the
Eastern European country missed its debt payments. "I don't see
the relation between China and Ukraine, but some people are
buying CDS here," said the trader.
The result was that China's five-year protection closed the
session 2bp wider, quoted at 92bp/94bp, some 3bp wider in the
day. That also pushed the Asia ex-Japan IG iTraxx index about
2bp wider to close at 137bp/138bp.
Hyundai Capital Services has mandated Bank of America
Merrill Lynch, BNP Paribas, Citigroup and HSBC for a potential
144A/Reg S/ bond sale.
AIA Group has mandated Citigroup, Deutsche Bank, HSBC and
Morgan Stanley for a similar potential issue.
The Republic of Indonesia has named Bank of America Merrill
Lynch, Citigroup and Deutsche Bank to take it on a non-deal
Sri Rejeki Isman has mandated Barclays for a potential