SINGAPORE, Sept 4 (IFR) - Asian financial markets weakened on renewed fears that the US will receive Congressional support for a military strike against Syria. Stocks sank in Asia although, at the end of the day, Japanese and Korean shares had recouped most of the losses and closed almost flat to yesterday.
Asian credits were pulled wider in sympathy, despite a better- than-expected services PMI from China. The Asia IG was hovering at 156bp-158bp, about 3bp out from yesterday or nearly 14bp wider from a month ago, although it had narrowed about 12bp from a week ago.
The main focus in today's markets was the widely anticipated launch of the Republic of Korea's 10-year bond at a guidance of 135bp over US Treasuries for a benchmark size of USD1bn.
"That is terribly cheap," said one trader. "If expectations are for a 15bp compression, well then it would be okay as it is way too wide now."
The announcement and expectations for fresh supplies of Korean paper pushed out outstanding credits from the country, but volumes were on the low side to suggest no widespread selling.
Nonghyup Bank has just mandated four banks for a potential US dollar Reg S issue, while a Korean corporate is also said to be preparing for an investor roadshow.
The 5-year Korean curve stretched out 2bp, while the belly widened 5bp. The Kexim and KDB 2022s were quoted at 121bp/110bp and around 121bp, respectively.
Korea Gas was indicated at 145bp/141bp, well inside its reoffer of 168bp, while KoFC was heard at 139bp/130bp, tighter than the reoffer of 145bp.
Other than the movements in the Korean paper, the rest of the market plodded along on a weaker tone. With the non-farm payrolls numbers due out soon, the street is not taking any chance to take on new exposures. "The investors are all waiting to see where the Treasuries go, and then people will decide what to do," said the trader.
Some selling was heard in the Indian and Indonesian names with the ICICI 2018s at 385bp/365bp, IOC 2023s at 410bp/390bp, and Indonesia 2023s at a cash price of 91.75/93.25.