Oil prices, slowing demand hit Asian bonds; China Orient trades down; liquidity still thin

By Christine Van Dusen

Atlanta, Dec. 12 – Asian bonds were unable to rally on Friday as sellers emerged and high-grade bonds closed as much as 4 basis points wider to end a challenging week for emerging markets assets.

Oil prices continued their decline on Friday, this time on the news that global oil demand could slow to under 1 million barrels per day in 2015.

“China oil names were hit hard, and closed 5 bps to 8 bps wider,” a London-based trader said.

China National Petroleum Corp.’s 2023 notes traded down, as did China National Offshore Oil Corp. And bonds from Malaysia were 3 bps to 5 bps wider while Cagamas Bhd.’s 2019s moved lower.

Also from China, the new issue of notes from China Orient Asset Management Corp. – a $500 million tap of its 3¾% notes due September 2019 that priced at a spread of 255 bps over Treasuries – traded down at 245 bps during Friday’s session, a trader said.

The notes closed Friday at 250 bps bid, 245 bps offered.

In other trading, spreads for notes from India were “broadly intact,” the trader said. “But liquidity is extremely thin.”

Among high-yield names in Asia, Chinese property companies saw their bonds move 1/8 point to 5/8 point lower, he said.

© 2015 Prospect News.
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