Asian bond spreads widened on Tuesday on fresh worries about the health of the global financial system after insurer AIG reported a record quarterly loss and another bailout from the US government. American Insurance Group reported a $61.7 billion loss on Monday, the biggest quarterly loss in US corporate history, and announced it would get access to up to $30 billion of new capital from Washington.
The Asia iTraxx investment-grade index excluding Japan, a key measure of risk aversion, widened to 460/470 basis points (bps) from 440/460 on Monday, traders said. MSCI index of Asia-Pacific stocks outside Japan was down 0.2 percent at 0320 GMT.
Indonesia's recently-issued bonds traded below their issue price, reflecting growing risk aversion. The country's 10.375 percent bonds maturing in 2014 fell to 96.375/97.00 from their issue price of 99.455, a Hong Kong-based analyst said. The nation's five-year CDS widened to 690/725 bps from 660/670 on Monday.
Philippines' cash bonds continued their declines, tracking losses in the broader market. The country's 8.375 percent bonds maturing in 2019, which were sold in January, were traded at 104.25/104.75 from 105.25/105.75 on Monday. The country's five-year CDS widened to 495 bps from 450/480, a Manila-based trader said. Meanwhile, Asia Aluminium won't increase the price for senior bonds or payment-in-kind (PIK) notes that it is buying back, its chairman said on Monday. Traders said the company's bonds have not traded recently.
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