Asian bond spreads widened on Monday as an expected string of new issues from the region kept investors from adding more debt into their portfolio, while others pocketed gains from a recent rally. Singapore's Temasek Holdings is the latest Asian state-run firm to announce plans to issue global bonds, joining Korea Gas Corp and the Philippines' PSALM.
"The market is consolidating after a massive tightening. Overall, investors are waiting for new issuance. There is still money in the pipeline, but these are mostly for new issues," a Singapore-based analyst from a regional bank said. The Asia Itraxx investment-grade index excluding Japan widened to 230/245 basis points from 220/230, a Hong Kong-based trader said.
The index, which measures 50 high-credit bond spreads in Asia, narrowed to its lowest level in seven months earlier this month. The MSCI index of Asia-Pacific stocks outside Japan was down 1.4 percent as of 0310 GMT. The following were the major movers in cash bonds and credit default swaps (CDS):
South Korea's five-year CDS widened by 10 basis points to 180/200, as plans by Woori Bank and other local firms to raise funds through the global bond market prompted investors to take profit, traders said. Philippines' cash bonds fell as some investors sold debt to buy the new PSALM issue, a Manila-based trader said. The country's 8.375 percent bond due in 2019 traded at 115.625/115.875.
The nation's five-year CDS widened to 250/265 bps from 245/250 on Friday, the trader said. Indonesia's five-year CDS were 10 bps wider at 360/400, tracking the performance of the broader market. State power firm Perushan Listrik Negara, which is meeting investors this week, may also sell debt after the briefings, traders said.
State Bank of India's five-year CDS, considered a proxy for India's sovereign CDS, was flat at 200/230 bps, as the euphoria over the outcome of the general election gave way to concerns about the nation's budget deficit and the fragile economy, traders said. Hutchison Whampoa's 7.625 percent bond due in 2019 was flat at 384/389 bps versus US Treasuries, traders said. The ports-to-telecoms conglomerate is embarking on a series of debt buy backs.
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