ASIA CREDIT CLOSE: Positive sentiment lifts Korean credits

Last Updated: Wed, May 08, 2013 09:20 hrs

SINGAPORE, May 8 (IFR) - The strong demand for Korean credits in the sweet spot of five years continued to lift much of the bonds from that country today.

"All the 2018s from the Korean names are being well bid in the markets," said one Singapore-based trader. "Korean paper has been underperforming in the last few weeks, and investors were technically not long in these names, so there is room for the credits to run up."

The demand helped KNOC's new securities. Its new 2018s, which priced at 145bp last night, tightened to 131bp-135bp range, while Korea Resources have rallied 10bp tighter from Monday. Daegu Bank was indicated at 148bp, about 7bp tighter from Monday.

The investor push into the five-year tenor has also boosted CNOOC's recent 2018s, which have gone sub-100. The paper changed hands at 95bp before settling at 98bp/99bp, far inside the issue spread of 120bp over Treasuries. Another five-year bond from Chinese property developer Yuexiu was quoted at 241bp/237bp.

The Petronas 2019s continued to ride on the positive sentiment, after the dominant political party in Malaysia returned to power, albeit at a reduced majority. The paper was quoted at 134bp, some 15bp from Monday.

Hutchison's euro-denominated perps were up at 100.125/100.625.

In general, the Asian credit markets gained along with all other asset classes in the region. Stocks rallied across the region with the Nikkei index ending 0.7% higher and the Hang Seng index up by 0.8%.

Credit spreads narrowed about 1bp-2bp to 97bp/99bp. The five-year CDS for the Philippines was at 80bp, while Indonesia was at 125bp, hardly dented by S&P's downgrade of its outlook to stable from positive. Traders described the move as "non-material".

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