ASIA CREDIT CLOSE: Investors cautious about heavy supply; Sinotrans CNH down 7 points

Secondary trading was muted today as investors were overwhelmed by new issues.

Sinotrans stood out as a underperformer as bondholders rushed to sell its CNH1bn 2017s on news this afternoon that trading in its Hong Kong-listed shares were halted ahead of a clarification of a local media report. The bonds were marked down 7 points to 93 while shares plunged 29.5%.

According to a local media report, managers at two units of state-controlled shipping and logistics company are allegedly being probed for helping clients reuse commodities as collateral to obtain loans from banks.

The company did not comment on the claims in its announcement today, but said it would issue a clarification shortly.

The broader market was unchanged to slightly tighter today. The Asia ex-Japan IG iTraxx tightened half a basis point to 106.5bp/108bp.

“Investors are cautious with secondary buying today because of the robust pipeline,” a Singapore-based trader said.

Four US dollar deals were announced this morning – Bank of China’s Tier 2, Shandong Shipping Corporation’s SBLC-backed deal, JSW Steel’s debut dollar offering and ICBC NY’s three-tranche deal.

“Investors are also taking some chips off the table as they wait for some clarity from the ECB meeting tomorrow and US payrolls on Friday,” another Singapore-based trader said.

China Travel Service’s dual-tranche bonds issued last week, for example, widened 2-3bp on profit-taking. The bonds, especially the 10-year tranche, tightened aggressively over the past week as that tranche left a decent concession compared to the 5-year tranche.

Indian senior bank paper was also well sought after, traders said. Meanwhile, Bank of India is planning to revisit the dollar market for a USD750m senior bond, IFR reported earlier today.

In the sovereign space, Indonesia cash bonds were down by 0.25 to 0.375 on lower-than expected GDP numbers. The South-East Asian country’s third quarter GDP growth dropped to a five-year low of 5.01%, compared to expectations of 5.1%.

Sri Lanka 2022s also dropped a quarter of a point to yield bid-5.24% as investors make room for Vietnam’s planned sovereign offering, which is expected to launch to the market tomorrow.
Source: Reuters