ASIA CREDIT CLOSE: Credit markets hold steady on Obama's win

Last Updated: Thu, Nov 08, 2012 10:26 hrs

SINGAPORE, Nov 7 (IFR) - Asian financial markets held steady at news that the closely-watched US presidential elections ended with Barack Obama winning a second four-year term.

"There has been talk that Obama is bad and Romney is good for the markets," said one credit strategist, "but in the long-term Obama's win will be credit-positive. Romney's term would have had been one of military confrontations on Iran and pulling the quantitative easing moves that are being put in place under Obama's watch."

For today, the mood seems to be more risk-on in Asia as share prices were up in the region, atlhough the Nikkei was a touch lower in the late afternoon hours.

In the credit markets, at least two deals from UTAC and China Overseas are live while a couple have been announced. China Oriental's proposed 10-year is indicated at 265bp and the 30-year at 290bp, which appear juicy compared with its outstanding bonds. Its 2017s were quoted at 205bp/195bp and the 2020s at 210bp/200bp.

Credit spreads were unchanged with the Asia IG index still at 113bp-115bp with no major movements in the more liquid sovereign benchmarks.

Bonds were also stable, with the best indicator seen in Hutchison Whampoa's newly minted bonds. The 2017s were quoted at 137bp/133bp, flat to the issue price of 135bp over US Treasuries and little changed from the 134bp seen yesterday afternoon.

The 2022s, which have performed better than the USD1bn five-year bonds thanks to its smaller issue size of USD500m, were quoted at 162/158bp, tighter than the 162.5bp they priced at.

China SCE rallied half a point up to 100.50 in the afternoon session, although it had pushed higher on the break in the morning to 101.75/101 after pricing at par yesterday. The small size of just USD200m helped support the bid tone for the single B rated credit in the secondary markets.

In the short-term, though, the markets will stay volatile on eurozone debt issues and China's political developments but the outlook for Asian credits look more optimistic next year.

"Ultimately, the Fed and ECB will keep the markets underpinned," said the strategist.

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