Asian bond spreads narrowed on Wednesday, spurred by investor hopes that the US economy, Asia's biggest market, is stabilising, though sentiment remained fragile because of the swine flu virus.
The US released upbeat data overnight included a surge in consumer confidence and a slower drop in home prices, offsetting bad news such as more capital raising for Citigroup and Bank of America, analysts said.
The Asia iTraxx investment-grade index excluding Japan tightened to 298/308 basis points from 305/310 on Tuesday, a Hong Kong-based trader said. Gains were capped by investor fears about the spread of the swine flu virus that could stall the global economic rebound and caution ahead of the release of the first-quarter economic data in the United States later in the day, traders said.
The MSCI index of Asia-Pacific stocks outside Japan was up 1.8 percent as of 0338 GMT.
The following were the major movers in cash bonds and credit default swaps (CDS):
South Korea's five-year CDS narrowed five bps to 275/285 after the central bank said the country had a $6.64 billion current account surplus in March, its biggest ever, traders said.
Philippines' cash bonds rebounded after falling for two straight sessions, as foreign investors covered short positions, a Manila-based trader said. The country's 8.375 percent bond due in 2019 rose to 110.625 from 110.00. The country's five-year CDS likewise narrowed to 310/320 bps from 315/330, the trader said.
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