Wires

ASIA CREDIT CLOSE:Hot market firmly focused on new issues

TOKYO, Oct 9 (IFR) - New issues dominated the Asian creditmarkets today, as investors shrugged off widening syntheticcredit spreads and focused on putting their money to work.

With Citic Pacific drawing a stunning USD7bn in a book on aUSD700m deal, it would seem that investors have a risk-on tonein the primary markets to spite a 1.5bp-2bp widening in thesecondary markets.

The iTraxx Asia ex-Japan is wider at 130.33/132.67bp,according to Markit, pushing out on news that the IMF haddowngraded the world growth's prospects to 3.3% and 3.6%,respectively, for 2012 and 2013.

The mood has to take into account the renewed liquidityinjected back into markets after a holiday in Monday in Japanand the US as well as the return of China markets after aweek-long holiday. With the market still flush with capital, newissues will dictate the sentiment for the week.

"All eyes are on new issues with at least four live deals inthe market right now. The bid for paper, both primary and newissue, remains overwhelmingly strong. The street doesn't havemany bonds to offer so new issues are the only game in town,"said one credit trader.

Indeed, Citic Pacific's newly minted bonds from yesterdaytraded up to 101 by the close of Asian hours, after opening at100.4-100.5 on the break.

The Ba2/BB+ rated transaction itself saw 52% of itsinvestors as private banks, building up a massive USD7bnorderbook to price the USD700m deal with a 6.6% yield at par.The new bonds are quickly catching up to Citic's 2021s, whichwere bid yesterday at 101-102 or a bid-side yield of about6.47%.

"It's a great time to be an issuer - most recent deals havepriced well inside of initial guidance. So far, IG names havedominated the primary issuance, but the conga line is forming inHY. There is a massive supply/demand imbalance in Asian creditright now and issuers of all stripes are very aware of this andpoised to take advantage," added the trader.

Hong Kong department store operator Lifestyle, ratedBaa3/BBB-, is set to price later today a 10-year USD Reg S dealindicated at USD300m. Final guidance has been tightened atUST+270bp +/- 5bp from initial +295bp on the back of a USD3.25bnbook. BofA Merrill, JP Morgan and StanChart are joint leads.

India's Syndicate Bank, rated Baa2/BBB-, is also in themarket with a 5.5-year Reg S deal with initial price thoughtsindicated at T+380bp area.

From the high-yield China property sector, Sunac China is inthe market with a 5NC3 Reg S trade. Initial indications were at12.75%. It did not seem to have an adverse impact on the Chinaproperty space, suggesting there were no flippers.

Similar credits from Kaisa's (B1/B+) newly minted 2017s havetraded up to 103.50 or a yield of 11.91%, while the KWGProperty's (B1/B+) 2017 bonds were at 112 or a yield of 9.85%.Using these as comps, the new Sunac deal seems to be offering agood pick-up, with a book heard above UD800m on an expectedissue size of USD300m. The 25 cent rebate should help sweetenthe PB bid.

"Any new China property name coming to the market will haveto offer a 10% plus coupon," a Hong Kong based credit analystsaid.

Primary markets

In Australia, mining giant BHP Billiton Finance Limited(A1/A+/A+) has raised AUD1bn (USD1.022bn) from its firstAustralian dollar denominated bond since 2001. The book was inexcess of USD2bn.

Nippon Life Insurance, the largest Japanese lifer, continuesits roadshow, to be concluded tomorrow, October 10, ahead ofreleasing price guidance on its 30-year non-call 10 hybrid. The144a/Reg S Global deal is expected to price later this week viaCiti and JPM.

With a subordinated structure United Overseas Bank is alsoout for funding. UOB is marketing a capped USD500m LT2 deal withguidance at UST+245bp area. Compared with its peers, the new subbonds could yield premiums of 15-20bp over DBS Bank's 3.625% due2022, which are quoted at around 225bp (103.866 or G-spread of214bp), and over OCBC Bank's 3.75% due November 2022 , which areindicated at 230bp (103.995 or G+223bp). OCBC Bank's outstanding3.15% due November 2023 are also quoted at 235bp over UST(100.788 or G+225bp).

Elsewhere, CapitaMalls Trust, the subsidiary ofSingapore-based property company CapitalMalls Asia, has raisedJPY10bn from a 7-year Euroyen placement via HSBC. The proceedsof the deal, which will close on October 15, will be swappedback to SGD.

The property company has followed in the footsteps of itspeer Ascendas REIT which sold a JPY10bn 12-year bond in April at2.55%, which also swapped the issue into SGD.

(Atanas.Dinov@thomsonreuters.com)

Keywords: MARKETS ASIA DEBT/