Newly issued bonds from Indonesia maturing in 2020 sold this month were traded around 101.25 cents on the dollar compared to 101.50 at the last close while Philippine bonds were quoted lower at 106-106.25 compared to 106.25 at the previous close, dealers said. "You don't catch a falling knife,' said Brayan Lai, a credit strategist at Calyon.
On Thursday, the Philippines took the first step towards unwinding easy monetary policy by raising the lending rate on the short-term rediscounting facility for banks. It follows on the heels of Beijing's decision to tighten policy by raising banks' reserve requirements and guide yields higher at bill auctions. India is expected to follow suit on Friday by raising bank reserve requirements.
In the primary market, Indonesia's PT Chandra Asri and Star Energy, Philippine lender Rizal Commercial Bank are expected to issue dollar bonds in the coming days, traders said. PT Chandra Asri plans to sell $230 million of five-year bonds around 13 percent according to unofficial indications, market sources said on Friday.
January has been a busy month for primary sales with overall issuance topping $6 billion so far, according to bankers. But, Nomura expects issuance to fall in 2010 to $35-40 billion from 2009's record level for Asia ex-Japan and ex-Australia.
The Asia ex-Japan iTraxx investment-grade index were 2 bps tighter at 105/107, traders said. The index has had a choppy month. After widening by as much as 15 basis points earlier this week after China's tightening moves it has narrowed to around 108, but is still far off from 2009's low of 87/89, dealers said. The Thomson Reuters Index of Asia emerging credit was quoted at 138.60 on a weighted average basis, easing further from an eight-week high recorded on Tuesday, and at 195 on a simple average.