ASIA CREDIT CLOSE: High-yield sovereigns rally, India gets busy

Last Updated: Thu, Apr 11, 2013 09:50 hrs

SINGAPORE, April 11 (IFR) - It was a rather busy market today as a new deal from State Bank of India caused a spike in the trading of bonds from the subcontinent with foreign investors buoying the bonds of emerging sovereigns in the region.

Indian banks were closing the session 3bp-5bp tighter on the day amid heavy two-way trading, according to two people.

ICICI 2017s, for instance, had been wrapped at 272bp over US Treasuries yesterday, but were closing today around 269bp.

The move was also helping some of the Indian corporate bonds outstanding and most liquid bonds in the space were some 3bp-4bp tighter.

Global investors also seemed keen to add exposure to the lower-rated sovereigns as bonds of Mongolia and Sri Lanka rallied. Mongolia's 2022s gained almost USD4 in price terms this week, and were last quoted around 98.00, while Sri Lanka's 2022s were closing some USD1 stronger on the day at around 107.00.

As sovereigns go, Indonesia's new bonds remained well bid and the 2023s were closing around 100.75/100.95 mid-market, some 50ct stronger in the day, while the 2043s were last quoted at 101.65/101.85, over USD1 higher in price terms.

While there was a lot of interest in cash bonds, CDS trading was lackluster and the Asia ex-Japan iTraxx Series 19 index ended the day only 3bp tighter at 111bp/114bp. The move simply emulated the move seen in the Treasury curve last night, which traders described as more of spreadsheet adjustment than actual trading.

The strong demand for Texhong Textiles' new USD200m bond, which saw books cross USD4.5bn earlier today, had yet to reflect on the rest of the Chinese industrial space, though.

In fact, one of the few bonds that moved in that sector were the 2019s of China Fishery Group, which dropped USD2 in price to a 92.00 bid after the company announced it was willing to pay a higher price to complete the acquisition of a Peruvian company.

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