ASIA CREDIT CLOSE: US Treasury move prompts technical bid for IG

Last Updated: Tue, May 07, 2013 09:40 hrs

SINGAPORE, May 7 (IFR) - A 14bp rise in the yield of the 10-year US Treasury since Friday prompted spread investors to pile into the market as some covered shorts and others picked up bonds at lower prices on hopes that they would rally again.

Spreads were tighter across the IG universe with some single names logging 25bp moves from Friday's levels.

ICICI 2020s, for example, were bought today for 207bp over US Treasuries, and were being quoted at 230bp/225bp on Friday. "The market has gone technical after the Treasury move," said one IG trader.

There was also a solid bid for anything Malaysian, as investors rushed to add weight on names from that country after the election uncertainty had been settled.

The 2019s of Petronas, for instance, were being bid at 135bp, whereas, on Friday, they were bid at 155bp. Traders also said there were a lot queries for Maybank's bonds, although anyone who owned them was unwilling to sell.

The 2022s of Hutchison Whampoa were also bid at 149bp over, some 9bp tight to Monday's open of 158bp, in spite of the announcement that the issuer would price a euro-denominated hybrid bond today.

Recent South Korean issues, which had underperformed until now, were also much tighter. The 5-year bonds of Korea Resources and Daegu Bank were quoted at 147bp and 146bp, respectively, over US Treasuries, both about 7bp tighter.

Meanwhile, high-yield trading was subdued as investors focused on the investment-grade issues. One analyst said there was hardly any movement and there was, at most, some screen jockeying.

In that context, traders were marking their spreadsheets with bonds about 10ct-25ct higher across the board, based mostly on their assumptions of where the bonds should be traded.

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