Influx of new paper has Asian bonds weakening; Cinda sees action; IBK trades at reoffer

By Christine Van Dusen

Atlanta, April 17 – Asian bonds put in a weaker session on Friday as investors continued to digest new issues and cut back on exposure after the International Monetary Fund rejected a debt repayment extension for Greece.

The debt, totaling about $1.1 billion, is due nearly next month.

“New issues are 1 basis point to 2 bps wider, while the rest of the high-grade space is unchanged to 3 bps wider,” a London-based trader said.

The new issue from Taiwan’s Formosa Plastics Group, which came to the market this week at a spread of 157 bps over Treasuries, was wider by 1 bp on Friday morning while China-based Haitong International Securities Co. Ltd.’s new 3½% 2020 notes that priced at a 220 bps spread ticked down.

“Good support,” the trader said.

The new $1.5 billion two-tranche issue of Islamic bonds due in 2025 and 2045 from Malaysia “held in unchanged,” he said, and the new 2020 tranche of 2.707% notes that Malaysia’s Petroliam Nasional Bhd. priced at a 110 bps spread moved lower.

Among high-yield Asian bonds, Chinese property company paper was unchanged. And sovereigns were generally lower, he said, with the Philippines curve unchanged to down ¼ point.

“The Indonesia curve is ¼-point to ½-point lower,” he said.

The new two-tranche issue of $3 billion notes from China Cinda Asset Management Co. was active in trading on Friday morning, a trader said.

The deal included 3 1/8% notes due 2020 that priced at 99.688 to yield Treasuries plus 190 bps and $1.7 billion 4¼% notes that priced at 99.71 to yield Treasuries plus 240 bps. Both tranches matched talk.

Cinda active in trading

Both of the Cinda Asset Management tranches “traded heavy,” the trader said.

“Both tranches traded heavy, with the five-year initially holding above reoffer at 190 bps bid, 188 bps offered, but it was 192 bid, 190 offered into the London open,” he said. “The 10-year traded at 239 bps for a brief moment and was wrapped around 244 bps bid, 243 bps offered for most of the morning before going wider ahead of the London open.”

At that point the notes were seen at 247 bps bid, 244 bps offered, he said.

IBK prints notes

Overnight, Industrial Bank of Korea priced an upsized $700 million issue of 2% notes due in 2020 at a spread of Treasuries plus 75 bps, a market source said.

The notes were talked at a spread of 75 bps to 80 bps.

BofA Merrill Lynch, Citigroup, Commerzbank, Deutsche Bank, HSBC, Mizuho Securities and IBK Securities were the bookrunners for the Rule 144A and Regulation S deal.

The deal was initially expected to total $600 million.

“Bonds traded up at 72, with onshore accounts adding at the break, but slowly leaked back to reoffer,” he said. “It was last 76 bps, 74 offered into London open.”

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