SINGAPORE, March 15 (IFR) - Indian banks recovered most of
yesterday's losses as real-money investors began to snap up
their bonds in secondary. The 2018s of ICICI Bank tightened 10bp
to 248bp/245bp, while the 2017s of Axis Bank gained 5bp to close
ICICI's recovery brought the bonds almost back to where
they were before a damning local media report accused some of
India's private banks of facilitating money laundering. Axis was
still 5bp wider to its Wednesday levels, but was still
tightening near the close.
"Private banking accounts and fast money were selling the
bonds yesterday, before some big guys started snapping them up
and they reversed," said one trader in Singapore.
Overall, however, investment grade tightened 2bp-3bp,
which, added to a similar action yesterday, brought the gains in
the asset-class to some 4bp-5bp over the past two days. Traders
said that, after a bout of selling earlier in the week on the
back of rising Treasury yields, accounts were buying IG credits
left and right.
"Real money, fast money, private banks, everyone was
buying, or covering shorts, I am not sure why, but they were
buying," said the trader.
As a result, the Asia ex-Japan iTraxx IG Index ended the
week at 99bp/101bp, some 5bp tight to where it was Monday.
One hedge fund manager offered a glimpse of what may be
happening, saying that the news flow from the United States is
expected to shift for worse and the uncertainty in Europe is
brewing again as the Italian Parliament convenes to determine
what will be made of the country's government.
"All the stock indices have been hitting all-time highs, I
expect a correction soon," the manager said.
The manager also said the yield on the 10-year US
Treasuries seemed to be in a very clear, albeit wide, range of
1.8% to 2.1%. So, as it touched the upper portion of the range,
investors started to buy IG again. "You have to play the range,
buy at 2.05% and sell at 1.9%," said the trader.
On the high-yield side, bonds ended on a positive note,
even as the strength of the rally in stock markets began to
flag. Chinese property names were, on average, USD1 higher in
price terms on Friday than where they started the week. The
newly minted 5-year bonds of Kaisa Group, printed at par, were
traded at 101.85 mid-market and the recently reopened 2018s of
Glorious Property Holdings were last quoted at 100.35/100.65,
higher than the par reoffer printed this week.
The only underperformers were the bonds of Winsway and
Hidili, as investors sold their paper in the wake of a coalmine
explosion in the Guizhou Province in China that left dozens dead
and caused concerns about upcoming liabilities for coalminers in
the PRC. Hidili's 2015s dropped some USD6 in price terms to
close quoted at 68.00/72.00 and Winsway's 2016s were some USD2
down quoted at 80.00/82.00.