Asian bond markets ended a year marked by a surge in risk premiums on a steady note on Wednesday with investors now looking ahead to new debt issues that could come as early as January.
Sentiment improved slightly after the Federal Reserve said on Tuesday that it planned to buy $500 billion worth of mortgage-backed securities by mid-2009, offsetting the latest grim consumer sentiment and housing data in the United States.
There was little trading as major Asian markets, such as Japan and South Korea were closed for public holidays. Hong Kong's financial markets will also be closed on Thursday. The Asia iTRAXX investment-grade index excluding Japan, a key measure of risk aversion, was steady at 330 basis points.
The benchmark high-grade iTRAXX index has surged more than five-fold since 2007, though it will end the year below the record around 650 hit in late October. The Philippines' five-year credit default swap (CDS) - or insurance-like contracts that protect investors against defaults or restructuring - remained range-bound at 350 basis points.
Indonesia was steady too at 600/700 basis points. Treasury Director General Rahmat Waluyanto said on Wednesday Indonesia planned to issue global bonds next year, though the timing had not yet been set. Asian bond spreads have widened sharply in 2008 amid a global economic downturn that has spared few corners of the world.
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