Asian bond spreads narrowed on Friday after a four-day rise, as improved US retail sales and service sector data lifted market sentiment and demand for riskier assets such as a new Korea National Housing Corp (KNHC) bond. State-run KNHC sold the $750 million bond due in 2014, at a spread of 265 basis points (bps) over US Treasuries.
The debt was trading at 263 bps in Asia, traders said. The KNHC sale attracted $2.8 billion worth of orders, a market source said. Of the total bonds sold, 68 percent went to buyers from Europe and 32 percent from Asia, the source said. By investor type, 60 percent of the purchases came from banks, 35 percent from fund managers and the rest from other investors, the source said.
In the broader market, the Asia ex-Japan iTraxx investment-grade index narrowed to 135/140 bps from 146/148 on Thursday, traders said. It reversed some of the 15 basis-point widening in the past four days after data that showed US retail sales fell less than expected in August. "There is a much improved sentiment globally, supported by better data from the United States. Most equity markets are up, that translates into better risk appetite," a Hong Kong-based trader said.
Philippine government bonds rebounded after a six-day decline. The 8.375 percent debt due in 2019 was up at 117.625/118 cents on the dollar from 116.75/117.50, a Manila-based trader said. The country's five-year credit default swap (CDS) narrowed by 8 bps to 191/197, the trader said. Elsewhere, South Korea's five-year CDS tightened by 5 bps to 135/140, traders said.
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