Asian bond spreads narrowed for a third straight session on Friday as a rise in Chinese equities which lifted demand for the region's riskier debt. The Asia ex-Japan iTraxx investment-grade index narrowed to 137/149 basis points (bps) from 144/150 on Thursday, traders said. The index has tightened by about 12 bps from a peak of 149/154 bps on Wednesday.
"Conditions are slightly supportive of risky assets after a reversal in Chinese stocks," said Enrico Tanuwidjaja, strategist at OCBC Bank in Singapore. "The market has priced in a relatively sustained recovery path globally and Asia will probably rebound faster. Overall conditions in Asia are more resilient than a decade ago, with stronger reserves positions, lower external debt and the responsiveness of fiscal and monetary policies." South Korea's five-year credit default swap (CDS) narrowed by 5 bps 140/150 bps, traders said.
Indonesian bond prices were higher, with the country's 11.625 percent bond due in 2019 trading at 132.75/133.75 cents to a dollar from 132.25/133.25, traders said. The nation's five-year CDS tightened by 3 bps to 214/228.
Philippine dollar bond prices rose on optimism the economy has rebounded in the second quarter, after shrinking a seasonally adjusted 2.3 percent in the first quarter, its weakest performance in two decades. The country's 8.375 percent debt due in 2019 was trading at 116.75 cents to a dollar from 116.25 on Thursday, traders said.