SINGAPORE, Jan 03 (IFR) - Very well-demanded transactions from Kaisa Group and Country Garden have boosted the prices on other outstanding issues from the Chinese property space. Most bonds from the sector were closing the day 75ct to USD1 higher in price terms as a result of huge orderbooks for the new bonds being marketed today.
Kaisa Group is out with a USD500m 7NC4 Reg S transaction indicated at 10.25% which has amassed more than USD7.5bn in orders while Country Garden was selling a 10NC5 Reg S/144a USD750m bond at 7.75% and was seeing orders breach the USD8bn level.
Given that Country Garden's final price talk placed it flat or inside the secondary levels of its outstanding 2018s, investors were finding the existing bonds cheap and lifting them. As a result, CoGard 2018s were closing the day quoted at 115.75/115.85, or USD1.5 higher in price terms.
Kaisa Group's 2015s were also up by about USD1. Other companies in the sector were also hitching a ride on the strong demand for Chinese high-yield, though, and Evergrande 2015s were closing the session quoted at 110.00, or almost USD1 stronger compared to yesterday's close.
To be sure, not all of the gains were due to the activity in the primary market. Proof of that was the Asia iTraxx IG index, which was closing at 104bp mid-market, about 3bp tighter than yesterday's print. Philippines CDS was again testing the 100bp level and Indonesia was catching up, 2bp tighter in the day, quoted at 128bp.
While traders reported better buying across the board, though, liquidity was light. Most of the actual trades were effected in the high-yield space and purely in response to the primary market activity.
High-grade accounts were standing back as they await the nonfarm payrolls results in the United States tomorrow before creating any new positions. The fact that the Japanese market was closed for a holiday as well also meant that there was very little Treasury trading during Asian hours, which left IG accounts without a benchmark to follow.