Most Asian stock markets fell on Thursday as investors worried that China would take more measures to temper growth after reporting its fastest quarterly growth in two years. "It's been widening quite a bit, driven mostly by what's happening in the equities market," a Hong Kong-based trader said. "There is also a fear of more supply coming out."
The Asia ex-Japan iTraxx investment-grade index, widened to 4 basis points (bps) to 97/99, traders said. It has risen 13 bbps from a 20-month low posted on January 12. The Thomson Reuters Index of Asia emerging credit was quoted at 123.98 on a weighted average basis and at 176.86 on a simple average.
Traders said there were talks that China Evergrande is increasing the size of its offering to $1 billion from a planned $500 million, adding to the downbeat sentiment in Asian credits. The cost of insuring debt from China against default has risen, with the 5-year credit default swaps traded at 77/80 bps, versus 68/73 on Wednesday, traders said.
Sovereign bonds from Indonesia and the Philippines, the most active issuers in the global debt market, also fell as investors pocketed recent gains, traders said. The Philippines' 2020 bonds sold this month were traded at 105/.875/106.25 cents on the dollar, down from 106.375/106.625 and snapping a two-day rise. Indonesia's newly-issued 2020 bonds were quoted at 100.25/100.50 cents on the dollar from 100.75/101.
Aside from Evergrande, traders also expected Vietnam to price its 10-year bonds worth $1 billion within the week at around 7 percent. Vietnam's 5-year credit default swap was flat at 230/250 bps. Adding to supply woes, state-owned Land Bank of the Philippines is also planning to revive its plan to issue as much as $150 million of dollar bonds within the first quarter to boost capital, First Vice-President Alex Macapagal said on Thursday.