Asian bond spreads widened on Friday after US jobs data underscored the depth of recession in the worlds biggest economy, but strong buying lifted the newly issued bonds by South Korean steel maker POSCO. The number of US workers drawing jobless benefits hit a new record high early this month to 5.47 million, Labour Department figures showed.
The Asia iTraxx investment-grade index excluding Japan, a key measure of risk aversion, widened to 380/400 basis points from 375/385 on Thursday, a Hong Kong-based trader said. The index, which tightened to its lowest level in a month on Wednesday, has narrowed by 30 bps this week helped by improving outlook for global banks and a surprising bounce in the US housing market.
Data provider Markit, which rolled out a new series of its iTraxx indexes on Friday, has added Hong Kong Special Administrative Region and Cathay United Bank Co to its investment grade index. They replaced Wan Hai Lines and Cathay Financial Holdings. There were no changes in the high-yield index constituents. The MSCI index of Asia-Pacific stocks outside Japan was down 0.6 percent at 0320 GMT.
The spread on POSCOs five-year bonds narrowed to 673/688 bps against US Treasuries from 736.7 when they were sold last night. POSCO raised $700 million, becoming the first Asian corporate issuer in the global market this year. Philippines cash bonds fell as investors pocketed gains after three sessions of gains, a Manila-based trader said.
The 8.375 percent bond due in 2019 traded at 108.375/108.75, down from 109.00/109.375. The bonds were sold in January at 99.158. The countrys five-year CDS widened to 380/400 bps from 370/395, the trader said. South Koreas five-year CDS widened by 5 bps to 375/385, as more local companies are expected to tap the global bond market for fund raising this year, traders said.