SINGAPORE, April 8 (IFR) - Asia credit markets were solid,
if lacklustre, today, amid North Korean geopolitical risk
concerns and the fear that questions surrounding Portugal's
austerity plan would ramp up eurozone tail risk again.
From a regional perspective, with the flow of new issuance
set to pick up, there are fears that new supply could weigh on
spreads given the roughly USD6bn of recent supply that has yet
to be absorbed. The iTraxx IG index is looking to close out at
120bp bid or 1bp tighter on the day.
A regional trader noted that there is a powerful bid for
duration in the wake of the Bank of Japan's mammoth QE measures
and that, with 30-year JGBs below 1% for the first time ever,
anything with a yield north of that looks like value.
Still, despite the duration bid, this year's supply of perps
is still struggling, with the exception of Petron, which is bid
at 102.75. The Agile perp is mired at 92.5 bid, while the
Reliance perp is at 98.25.
A standout today has been the Kexim and KDB curves, which
are around 5bp-10bp tighter, largely on the back of short
covering. Investors traded out of the Korea FIG sector last week
in response to North Korea's sabre rattling.
Elsewhere, real money has been nibbling at high-yield, which
is around 12.5ct to 37.5ct better, as investors look for yield
after non-farm payroll data sparked a US Treasury rally.
The India FIG curve is awaiting possible issuance from State
Bank of India, with some players concerned that a cheaply priced
deal would reprice the entire curve.
Meanwhile, the planned 10s/30s issuance from the Republic of
Indonesia has put pressure on the Philippines and Indonesia
offshore curves, out 7bp-8bp and around 10bp, respectively.