SINGAPORE, Feb 15 (IFR) - There were sporadic bouts of
buying in Asian credit, both on the back of short covering and
bargain hunting, although for the most part the market retained
its illiquid holiday mode.
The bargain hunting was focused on the shorter end of the
high-yield curve, with dates below 2015 lifted in scrappy size.
The Shui On and Evergrande 2015s were each up a half to 106
and 108 respectively with the low duration of the short date and
relatively high cash price appealing to investors increasingly
looking to reduce rate risk exposure.
Meanwhile the battered up recently issued perp sector also
caught the short covering tailwind, with the Reliance perps up
at 98 bid, the Cheung Kongs at 93.5 and the Petrons solid at
103. The Street is short inventory according to a
Singapore-based trader, who sees more room for price gains as
the short squeeze continues.
Investment grade was muted, although the trader saw room for
further spread tightening against a backdrop of low funding
rates. The JACI investment grade index is at the 210bp mark,
still some way off the 2010 tight of 170bp, and against a rising
yield trend in the Treasury market the spread tightening dynamic
could have legs.