Credits flat in sluggish markets

Wednesday, 7 August 2013 00:00 - - {{hitsCtrl.values.hits}}

IFR: The holiday mood is seeping into the region’s credit markets as traders reported extremely thin trade yesterday with most Asian bonds broadly unchanged. The traditional summer holidays are beginning to take hold and, in South-East Asia, the week is two days shorter with days off Thursday and Friday, making market players reluctant to take up major positions. The Asia IG index was flat with quotes at 142bp, although the Australian index tightened about 2bp after the Reserve Bank of Australia cut its benchmark rate to 2.5%.

Korean bonds, particularly short-dated ones, found good bids. The most recently priced 2018s from Korea Gas were about 1bp tighter at 142bp-138bp. The appetite for Korean paper encouraged SK Innovation to emerge this morning with a 5-year deal indicated at 255bp over US Treasuries. It looked wide relative to other Korean names, such as LG Corp’s bonds, which were at 145bp. The Indian credit curve was fairly stable today, with some buying seen in shorter-dated notes. Some paper, particularly in the 3-year segment, was heard being exchanged. However, one Singapore-based trader said: “It is still not that active since no one wants to go short or long, which makes it pretty boring.” IOC’s 2023s were around 345bp mid-spread, but the bid-offer gap remained very wide, reflecting the lack of interest in Indian 10-year paper. In the China segment, Poly Real Estate’s 2018s were indicated at 345bp/335bp, slightly tighter from yesterday, but still wide from the reoffer spread of 335bp, while buyers of Baidu’s 2018s could not find any good offers since the notes went mainly to the US markets. Longyuan’s 2016s were barely traded today, after pricing at 285bp last night, on account of the small size, which meant that investors were holding on tightly to the paper. Still, they were being quoted some 10bp tighter in spread, where quotes could be found.