Asian bonds gain

Asian corporate and sovereign bonds gained on Monday, tracking a rally in stock markets and spurred by hopes of more US rate cuts, while spreads in new bonds from South Korea's KOMIPO tightened on their debut.
But worries about the US economy and potential downgrades in US bond insurers remained and trading was thin ahead of the Chinese New Year holiday celebrated in many parts of Asia on Thursday and Friday.
The iTRAXX Asia ex-Japan high-yield index - an important indicator of risk aversion - tightened by around 10-15 basis points (bps) to 476/483, according to a trader, well below the level above 500 seen in late January.
Spreads in the 5-year bonds from Korea Midland Power Co (KOMIPO), a unit of electricity provider Korea Electric Power Corp, tightened to 260 bps over Treasuries from the 270 bps at which the issue was priced on Friday. "The markets are doing much better thanks to the rally in equities and hopes for more rate cuts, but flows are very light," said a trader in Hong Kong.
Standard & Poor's said on Monday it has placed its ratings on four Asia-Pacific synthetic collateralized debt obligations (CDOs) guaranteed by US bond insurer MBIA Inc on review for a ratings downgrade.
The action had been widely expected after S&P last week placed its top rating on MBIA's bond insurance unit on review for a possible ratings cut. Investors cautiously welcomed reports on Friday that several large banks were looking to shore up MBIA rival Ambac Financial Group, after Fitch took away the top credit rating for the main unit of the bond insurer last month.
Philippine debt, among the most widely traded in the region, was unchanged from Friday's levels, with bonds due in 2032 quoted at 98.375/98.875 cents to a dollar, and the 2031 bonds at 112.75/113, according to a trader.
Manila's five-year credit default swaps - insurance-like contracts that protect against defaults or restructuring - tightened slightly to 200/208 basis points. KOMIPO new bonds were well bid, and the utility on Friday priced its 5.375 percent bonds at 198 basis points over mid-swaps, well below its initial guidance of 212.5 bps before the launch of the deal.
The deal attracted $1.2 billion in orders from 73 investors, according to a bank involved in the sale, with 70 percent of the new KOMIPO bonds sold in Asia, and the rest in Europe. Banks took 45 percent of the issuance, with asset managers and funds taking 30 percent, insurance firms 20 percent, retail investors 4 percent and others 1 percent.