Bonds from Thailand's PTT Exploration and Production PCL gained on their Asian debut on Thursday, outperforming an overall weak market hit by poor US retail sales data and the Federal Reserve's downbeat outlook. The Asia ex-Japan iTraxx investment-grade index traded at 122/126 basis points (bps), 3 bps wider than the previous day's close, traders said.
Sovereign credit default swaps (CDS), except for China, widened as well. Investors found few surprises in China's second-quarter GDP data, which showed annual growth moderated to 10.3 percent from 11.9 percent in the first quarter, slightly below expectations. Instead, yield-hungry investors continued to chase new issues from Asian corporate.
"China's (economic) numbers were broadly in line with what was priced into the market. While supply in Asian credit has been strong with $3.45 billion of new issuance in the last two weeks, demand has been sufficiently robust," said Krishna Hegde, Asia credit strategist at Barclays Capital in Singapore. "We have seen incremental asset allocation into Asian bonds through the course of 2010 and that is helping absorb supply."
PTT Exploration, through its Australian unit, sold $500 million of bonds due in 2015 at 230 basis points over US Treasuries, within its target. The bond was traded at 225 bps on Thursday.
The deal attracted $1.7 billion in orders, a source close to the deal said. Investors from Asia took 69 percent of total sales, US 20 percent and Europe 11 percent. Fund managers and hedge funds accounted for 75 percent, banks 14 percent and retail and other investors the balance. Traders said the new bond offered a yield pick-up versus its peers such as Petronas debt due in 2014, which last traded at around 160/170 bps.
"It (PTT) is an important entity for the Thailand government's energy plan and there has not been any dollar bond issuance from Thailand in the last two to three years, so there is scarcity value as well," said Bharat Shettigar, senior credit analyst at Standard Chartered Bank in Singapore.
Woori Bank's bond due in 2016, sold on Tuesday, widened 3 bps to 304 versus US Treasuries, moving along with the broad market, traders said. The debt debuted 4 bps tighter in Asia on Wednesday at 296. China's five-year CDS tightened 1-2 bps after the GDP, traders said. The iTraxx SovX Asia Pacific index, which tracks the five-year sovereign CDS of 10 countries in the region including China, was 2 bps wider at 120, traders said.