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ASIA CREDIT CLOSE: New issues drive slim trading

SINGAPORE, Oct 8 (IFR) - Asian credit was fairly quiet today as holidays in Japan and the United States drained liquidity from the market. The few trades that crossed the screens were related to new issues being announced. The outstanding 2021 bonds of Citic Pacific were closing the session bid at 100.50, down 50ct in price terms, after the Hong Kong conglomerate announced a new 10-year bond. The drop came even as the new Reg S transaction by the company was heard having garnered more than USD3bn in demand. China South City's 2016 bonds were also down by about 35ct bid at 97.00 in the secondary as the Chinese developer marketed a new 5-year bond with a yield of 14.25% area.

Apart from a few trades on the outstanding bonds of issuers marketing new transactions, there was little to write home about. Traders marked up their spreadsheets in investment-grade putting out the Asia ex-Japan iTraxx IG Index Series 18 at 133bp, pricing in a 2bp tightening to account for a rally during the US trading session on Friday due to better than expected nonfarm payrolls. The index move was emulated on most of the investment-grade benchmarks but traders did not report much trading per se on the bonds. "It has been really quiet," summarized a credit analyst in Singapore.

Not even the return of the Chinese market after a weeklong holiday accompanied by a positive economic number in the country was enough to prompt investors to action. The HSBC Services PMI for September came out today at 54.3, higher than the last reading at 52. Credit markets shrugged the news, though.

The positive data was not enough to turn equity investors bullish either and the Hang Seng Index finished the day almost 0.9% down as investors reacted to news that IPO approvals on the mainland would pick-up again and earnings estimates continued to be cut. News that the World Bank had cut its growth estimates for the region also hit stock markets, though credit markets did not react to that headline.

Indeed, brokers have been saying that they expect most of the trading this week to be driven by the new issues. The only bonds that have been seeing liquidity are those printed in the past two weeks and most movements of older bonds is generally prompted by fresh deals from the same issuers - as was the case today. Hence, secondary desks are closely monitoring the pipeline and the deal announcements to figure out how to trade.

Christopher.Langner@thomsonreuters.com

Keywords: MARKETS ASIA DEBT/