SINGAPORE, April 22 (IFR) - The market was focused again on
new issues with Indian corporate issuers returning to the
spotlight after Union Bank of India announced a new 5.5-year Reg
S bond at 315bp over US Treasuries.
This time, however, accounts were taking the opportunity to
sell some of the bonds that had rallied the most. The bonds of
Bharat Petroleum and Power Grid Corp, for instance, were seeing
However, as some institutional accounts were underweight on
India and are now starting to add the country to their
portfolios after an improvement in current account numbers, the
sellers found buyers and Bharat Petroleum 2022s, for instance,
ended unchanged at 235bp/230bp. Yet, the pressure was there.
"India's corporate spread curve is one of the flattest in
the region, it makes sense to sell the long end there," said one
Accounts were also taking profit on some of the high-yield
bonds that rallied the most in the past twelve months. Country
Garden 2015s, for instance, saw some selling and finished the
day some 25ct lower in price terms at 112.00/112.75.
Meanwhile, the new bonds in the high-yield space were
getting a boost from a rally in the 5- and 10-year bonds sold on
Friday by unrated China Minmetals Land. The USD125m 2023s, which
were issued at par to yield 6.5%, were wrapping up the day at
103.00, while the new 2018s, sold at par to yield 5.5%, traded
as high as 104.00.
"(It was) near impossible to find any bonds, there is no
executable level," noted a sell-side analyst. He suggested there
could have been a bit of a short-squeeze, given that the
transaction did not seem well supported initially last week and
it did not include high-yield covenants, in spite of its
Hence, it would make sense that some accounts shorted it.
However, the transaction ultimately found a lot of support and
that turned the trade against shorters. Plus, the smaller size
that resulted from dividing the deal in two tranches meant that
repo desks had none of it to lend so any naked shorters had to
resort to the market to cover their bets.
Aside from the new issues, though, the market was pretty
much unchanged. The Asia iTraxx IG Series 19 index, for
instance, ended at the same level where it closed on Friday, at