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
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.