Asian bond spreads narrowed on Thursday, as investors cheered Chinas plan to increase spending and implement other fiscal policies to support the worlds third-largest economy. China aims to achieve 8 percent growth this year, Premier Wen Jiabao told the National Peoples Congress.
The Asia iTraxx investment-grade index excluding Japan, a key measure of risk aversion, narrowed to 430/450 basis points from 440/470 on Wednesday, a Hong Kong-based trader said. MSCI index of Asia-Pacific stocks outside Japan was up 0.5 percent at 0311 GMT. Chinas five-year CDS narrowed to 240/255 basis points from as much as 265 on Wednesday after Beijing announced economy-boosting measures.
South Koreas five-year CDS narrowed to 420/450 basis points from 475/505, reflecting the return of risk appetite overnight. Sentiment also improved as the won rebounded from 11-year lows after vice finance minister Hur Kyung-wook said the countrys policy was to intervene when the currency market "overshoots".
Philippines cash bonds gained ahead of the central banks meeting on Thursday. Policy makers are seen cutting rates even after the inflation rate edged up to 7.3 percent in February from a year ago, the first increase since August and higher than Januarys 7.1 percent. The countrys 8.375 percent bonds maturing in 2019, which were sold in January, were traded at 106.375/106.5 from 104.75/105.00.
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