Asian bond spreads widened on Tuesday, as the market took a breather after four days of gains tracking weak equities, but Indonesian sovereign bond prices rose on a government plan to raise more revenue. Indonesia's new tax chief told Reuters the government would go after tax-dodgers to raise revenue, and would deploy "tax spies" abroad to track down tax evaders.
Jakarta aims to raise $73 billion in taxes in 2010, up 12 percent from this year's estimate. "It will create some good noise in the market, but the actual implementation will be very difficult," a Hong Kong-based trader said. "But it's a step in the right direction to narrow the budget deficit." Indonesia's 11.625 percent bond due in 2019 was trading at 134/135 cents to the dollar from 133.50/134.50 on Monday, traders said.
It has risen sharply from its issue price of 99.276 in March this year. In the broader market, the Asia ex-Japan iTraxx investment-grade index was slightly wider at 135/139 basis points (bps), traders said, from 131/136 on Monday, its lowest since August 11. "This is a minor correction, mirroring what happened in the US," a trader said. "Some investors are squaring their positions before September, when they expect more new issues coming out of the pipeline."
The MSCI index of Asia-Pacific stocks outside Japan was down 1.04 percent as of 0335 GMT. South Korea's five-year credit default swap (CDS) widened by 4 bps to 134/140, traders said. The Philippines' 8.375 percent debt due in 2019 was steady at 117.00/117.50 cents to a dollar, but the nation's five-year CDS widened by 5 bps to 185/200, Manila-based traders said.