ASIA CREDIT CLOSE: New issues perform well despite week's heavy supply


SINGAPORE, Oct 12 (IFR) - The positive tailwind created bylast Friday's US employment data, which saw the unemploymentrate fall to the lowest level (7.8%) seen during the Obamaadministration has retained momentum as we come into the closeof the week.

The iTraxx series 17 index has pulled in 3bp to 127bp/129bpin a measure of the overall upbeat market sentiment which hasallowed eight new issues to print this week from Asia.

The generally decent secondary market performance of the newissuance underlines the fact that even at apparently tightpricing there is a surfeit of cash meeting a relatively scantsupply of new supply.

In stark evidence of this, yesterday's new USD400m 7 NC 4Reg S for China property developer Longfor which came at par, isbid up at 101.375, with the cash available to be put to work viaemerging market fund inflows illustrated by the hefty USD13bnbook the deal pulled in.

"These are the best market conditions I have seen for Asiacredit in over five years. It might well be a case of 'as goodas it gets' as we face the prospect of an uncertain post USpresidential election period and the fiscal cliff looming earlynext year, but for now the rising tide has lifted all boats,from high-grade to high-yield," said a DCM origination head at abulge-bracket US investment bank.

Still, although high-yield appears to be back with avengeance in the Asian primary market, there remains a degree ofname discrimination. So the China South City due 2017s whichpriced on Wednesday at the puny USD125m mark are around 98 bid,or two points off reoffer, with few trading desks willing tomake a tight two-way firm price on the deal.

Elsewhere however, recent issuance in the IG space isgraphically illustrating the underlying strength of demand. Sothe new Citic Pacific 2023 are bid at 101.8 from a par reoffer,while unrated although implied high-grade SMIC 2019s are up at101 bid from a par reoffer. Meanwhile the Syndicate Bank due2018s are 2bp inside reoffer at a Treasuries plus 353bp bid.

It remains to be seen whether the market's pristine healthcan continue, with a regional syndicate head pointing to theupcoming risk of the Spanish regional elections on October 21and the Moody's review of the country's credit rating as factorswhich could take the edge off sentiment in the short run.