Reuters: Financial Services and Real Estate: ASIA CREDIT CLOSE: Weaker Asia session as Greece returns to the spotlight

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ASIA CREDIT CLOSE: Weaker Asia session as Greece returns to the spotlight May 9th 2012, 09:03 Wed May 9, 2012 5:03am EDT SINGAPORE, May 9 (IFR) - Asia credit markets had a softer tone as noise from the eurozone is getting louder, with the focus now squarely back on Greece's debt woes and its political impasse as well as uncertainty regarding France's new president Hollande unsettling market players. The iTraxx series 17 IG index is 3bp wider coming up to the close at 177bp/178bp, with investment grade paper around 5bp wider across the board. The price action softened as European markets opened soft on a rumour that the "troika" of EU representatives had canceled a planned visit to Athens amid the country"s political turmoil following the recent general election. Meanwhile a regional syndicate head played down fears that Hollande will scupper the eurozone's austerity drive claiming it was "normal politics" and that France"s policy regarding deficit reduction would remain broadly in line with that of outgoing president Sarkozy. Amid the volatility primary markets are trying to gauge what an appropriate pricing concession for new issuance should be, with a clue coming in the form of Indonesia"s Lippo Karawaci, which is aiming to price a new 7 NC 4 wide to comps, with the initial 7.25% guidance putting it 75bp back of the Indika Energy 2018s. "Investors need to be compensated for the prevailing volatility and you need to leave some meat on the table to pique their interest," said the syndicate head. Meanwhile recent new issuance is something of a mixed bag, with the Hutch perp the most convincing of the recent deals, closing out at a 100.15 bid, with the ultra high duration paper having traded above its par reoffer since pricing last week. By contrast the new RHB 2017 is weak, and closing out at a Treasuries plus 258bp/256bp versus its plus 255bp reoffer. Further weakness has been seen in the Pertamina two-parter, with the trend for the issuer's curve to flatten continuing as the 2022s underperform the 2042s, as the latter is tightly held by long duration insurers and pension funds whereas faster money found its way into the 10-year piece. Each tranche is bid at 98.875, with the 2042s an eighth above reoffer and the 2022s around a half below. In its latest assault on China corporate independent research firm Muddy Waters singled out Fufeng on governance concerns, with the report hurting the company's due 2017s off four points on the day to 82/85. And the company's favourite target, with which it is engaging in a mammoth legal battle, Sino-Forest, is the subject of a bond auction conducted by Creditex, which will attempt to establish fair value on the company's outstanding offshore debt following the kicking in a credit event a few months ago. Across the Sino-Forest curve, from the due 2013s to the 2017s, the indication is 27/30, implying a 70%-odd haircut in the event of an orderly restructuring of the company's debt. Elsewhere in high-yield, China property has shown residual weakness on profit taking after a recent run-up in prices, despite weak sales numbers throughout the sector. Industry bellwether the Cogard 2018s are off 0.75 today at 99.5/100.5, while the Agile 2017s are 0.625 weaker at 98.35 bid. jonathan.rogers@thomsonreuters.com Link this Share this Digg this Email Reprints

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