Asia credit markets were flat on Wednesday as worries about more losses at global lenders and renewed concerns about the US housing sector coincided with speculation of a rescue plan for US bond insurer Ambac.
Investors also held back waiting for key US economic data later on Wednesday, including the February non-manufacturing data from the Institute for Supply Management, for clues about the extent of the slowdown in the world's largest economy.
The iTRAXX Asia ex-Japan high-yield index - an important measure of risk aversion - was trading at 589/593, little changed from the prior session, according to one trader. Spreads in the high-yield segment have surged by more than 200 basis points (bps) to record highs this year, as worries about the US economy and credit-related writedowns plaguing the global financial sector have taken their toll.
A steady stream of negative news has kept investors in Asian credit on the sidelines. Moody's Investors Service on Wednesday placed its "A3" ratings for units of Security Capital Assurance (SCA) on review for another downgrade after the bond insurer failed to deliver an annual report to the Securities and Exchange Commission.
SCA's units, including XL Capital Assurance, had already lost their top credit ratings by Moody's last month. Philippine bonds due in 2032 were quoted at 96.625/96.875 cents to a dollar and 2031 debt at 110.5/110.75, according to the trader. Its five-year credit default swaps (CDS) - or insurance-like contracts that protect against defaults or restructuring - initially widened by around 5 bps to 240 before narrowing back to range-bound levels at 237.
Separately, the Philippines' economic planning secretary said on Wednesday economic growth in the first quarter was likely to come in below 7 percent year-on-year. The government had already said growth this year would taper to 6.3-7.0 percent because of a slowdown in the United States, the Philippines' largest trading partner.