Asian debt spreads narrowed on Monday as upbeat economic data lifted sentiment on the region's stocks and bonds, but the Philippines underperformed on worries about the widening budget deficit. The Asia ex-Japan iTraxx investment-grade index narrowed to 103/107 basis points (bps) from 106/110 on Friday, a trader from Singapore said. "The credit market is kicking and alive," a Hong Kong-based trader said.
"There is a lot of inflow of money coming. People are still buying, they are still bidding it up." Asian shares rose on Monday after upbeat reports from US retailers added to signs the global economy is on the mend. But Philippine sovereign bond prices slipped on worries data this week would show that the deficit had widened further in October. The budget gap has swollen to 95 percent of the official forecast as of during the nine-months to September.
The Philippines, one of Asia's frequent sellers of global bonds, is struggling to cap the deficit within its 250 billion peso ($5.34 billion) estimate, as the economic slump weakened revenue collection. Philippines' 6.375 percent bond due in 2034 traded a quarter point lower at 98.00/99 cents on the dollar, Manila-based traders said. There were no trades on the country's 5-year credit default swaps (CDS), last seen at 170/180 bps, traders said. Tracking the broad market, Indonesia's 11.625 percent bond due in 2019 was quoted at 141.50/142.50 cents on the dollar, up from 141.00/142.00 on Friday, traders said.
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