SINGAPORE, March 25 (IFR) - The risk-off mentality that had become the order of the day in the face of the unfolding Cyprus debt crisis mitigated today in the Asia secondary debt markets, although, perhaps, with less conviction than had been expected. A deal was struck with the European Central Bank to avert a Cypriot bankruptcy.
The iTraxx IG Index is 5bp tighter coming up to the close and last printed at 115bp/117bp. However, cash is mixed, with a swathe of planned new issues weighing on spreads, and the IG sector managing to pull in just 3bp on average.
In China property, China Vanke's recently issued due 2018s were pummelled after the announcement of bonds from China State Construction, on fears of oversupply.
The bonds were last at Treasuries plus 215bp/212bp, having been issued at plus 195bp and quoted this morning at 212bp mid-market.
Indian banks are holding their own, despite planned issue from wind-turbine maker Suzlon, backed with a State Bank of India standby letter of credit, which effectively means the issue has come off SBI's credit. The recently issued IDBI 2019s have held in at their reoffer and are plus 300bp bid.
"This market is slightly better bid on the back of the ECB's support of Cyprus. However, there are other looming concerns for Asian credit in the form of potentially rising Treasury yields and fears of a correction in, what looks like, an overheated US stock market.
Rising Treasury yield concerns are keeping a lid on the Asian IG sector on the view that spreads in the sector will move in lock-step with any major Treasury market correction," said a regional credit analyst in Singapore.