SINGAPORE, June 25 (IFR) - It was a light trading day in
Asian credit markets with little local input to set a definitive
tone and all minds focused on the European summit later this
week for cues as to short term direction.
Spanish 10-year government debt is 9bp wider at the London
open versus Friday's close, printing 6.47%, comfortably inside
the 7% plus all-time high on the back of the ECB collateral
Spain CDS is 5bp wider at 564bp and expected to remain on a
low volatility tack ahead of the summit, the main hope for which
is that Merkel will say yes to eurozone bond issuance or added
fiscal assistance for Greece, Italy and Spain. The iTraxx series
17 is 3bp wider on the day at 183bp bid, unchanged from this
Meanwhile recent new issuance has for the most part held in
well, with the First Pacific 2022s up at a 100.75 bid, versus
the deal's par reoffer last week and the Hang Lung 2017s at
Treasuries plus 325bp bid versus a plus 335bp reoffer spread. An
exception are the IOI 2022s which are hanging at plus 283bp bid
versus a plus 280bp reoffer.
The attack on Evergrande's paper following a "research
report" from US-based Citron research partially reversed, with
the company's due 2015s up a quarter to 93 bid, having tanked to
a low print of 89 soon after the report came out last Thursday.
The rest of the China property sector has had a mildly
encouraging day of trading and is up around a quarter on
average. Bellwether Cogard 2018s are up a quarter at 99.625,
while the recently issued Agile 2017s are up 0.375 at 98.75 bid.
The China hard landing crowd will have a chance to see
evidence for the veracity of their view when the country's PMI
set for release on Sunday and expected to come in at the
critical sub 50 level. China CDS is softer coming up to the
close at 128bp bid, or 5bp wider on the day.
A regional syndicate head remained upbeat about the
potential for the heavy Asian pipeline to convert into live
deal, noting that in the US last week some US$2.5bn flowed into
high-grade bond funds, underscoring the bias away from risky
equities and into investment vehicles offering a pick-up to the
scant yields available at the short end.