The cost of insuring Korean debt jumped on Friday over growing concerns the government will need to take measures to support its banking system. The broad market was steady to marginally higher but concerns remained the global economy is hurtling towards a downturn.
The iTRAXX investment-grade index was steady at 307/320 basis points (bps) but the high-yield equivalent widened out to 900/975 bps from 860 bps. South Korea's five-year credit default swaps (CDS), insurance-like contracts that protect against defaults and restructuring, widened to 365/400 bps from 300/360 bps.
Bonds from Philippines, one of Aia's most frequent debt issuers, edged higher but volumes were thin as the rally lacked conviction, traders said. The 2032 bonds inched up to 81/82.50 cents to a dollar from the overnight bid of 80.50 and the 2031 bonds moved up to 91/92 from a bid of 90. The Philippine 5-year CDS traded as tight as 380 bps before moving out to 405 bps, compared with Thursday's range of 400/415 bps.
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