Asian bonds higher

Asian bonds rose on Tuesday, boosted by regional equities and a set of strong economic data out of the United States. But gains were capped by investors' persistent doubts about the health of the world's biggest economy. "I don't think there is a whole lot of conviction this week is full of data," said a Singapore-based trader.
"We are hostage to stock prices, Bernanke's speech, jobs data," he added referring to Fed Chairman Ben Bernanke's testimony on Wednesday and US March payrolls report on Friday. Although Asian stocks nudged higher, gains were muted as equity investors remained uncertain about the extent of write-downs faced by the financial sector.
The National Association of Purchasing Management-Chicago index, also known as the Chicago PMI, showed business activity in the Midwest was still shrinking, but the data was not as bad as some had feared. But a decision by Wall Street firm Lehman Brothers Holdings Inc to raise as much as $3 billion in capital to bolster its balance sheet stirred fresh worries about the health of the US financial industry.
Traders said most of the activity was in credit default swaps - insurance-like contracts that protect against defaults and restructuring - with many rushing to sell protection. China's 5-year sovereign CDS traded as tight as 73 basis points (bps) before quoting at 75/79 bps. It was at 80 bps on Monday. Korea's 5-year CDS was quoted at 87/95 bps, tighter by 5 bps.
A downgrade in the credit rating of Indonesian shipping firm Berlian Laju Tanker (BLT) did not have an impact on its 2014 bonds which were steady at 61/65 cents to a dollar. Analysts' opinion was divided on this credit.
Standard & Poor's Ratings Services cut the company's rating to B from B-plus and retained the negative watch for the company's failure to meet a "net-debt-to-equity ratio" covenant governing its bond issue. Meanwhile, bonds from the Philippines, the most active sovereign issuer in Asia ex-Japan, edged higher in line with the broad market while its CDS spreads tightened. Bonds from Manila due in 2032 were at 96.875/97.25 cents to a dollar and bonds due in 2031 were at 112/112.25. The Philippine 5-year CDS contract was traded at 235 bps from the previous 247/248 bps.