Reuters: Financial Services and Real Estate: ASIA CREDIT CLOSE: Screen-jockeying on IG, PB seller of HY

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ASIA CREDIT CLOSE: Screen-jockeying on IG, PB seller of HY May 7th 2012, 08:58 Mon May 7, 2012 4:58am EDT SINGAPORE, May 7 (IFR) - Asia saw a slow session as the London market is closed, pulling out some of the afternoon liquidity from the market. Still, traders took the opportunity to mark their spreadsheets in order to reflect the negative news flow over the weekend. Weaker than expected nonfarm payrolls and a socialist victory in the French presidential election had stock investors on the back foot. The Hang Seng index ended the day 2.89% down while the Nikkei 500 was down 2.33%. The move spilled over to Asian credit mostly through the Asia iTraxx IG 17 index, which closed the session some 6bp wider at 171bp/174bp. But if the CDS index was under pressure, cash bonds were steady. The little trading on the high-grade space was seen mostly on the newly issued bonds by Korea Western Power and Lotte Shopping. Both were mostly unchanged from Friday, respectively at 230bp and 257bp mid-market. "The market has been directional, but real-money is yet to sell," said a DCM banker. If funds were holding on to their investment-grade bonds, the same cannot be said about private banking accounts and high-yield bonds. Traders reported better sellers all day, especially among retail accounts. As a result, high-yield bonds were 25ct to USD1 weaker across the board. Country Garden's 2018s, for instance, had dropped some 75ct in the day, bid at 100.25. In spite of the selling pressure on that space, bankers are still confident that real money will continue to buy, especially high-grade paper. "There has been a diversification into Asia," suggested one banker, who also noted that many of the largest asset managers are still rebalancing their portfolios, which were underweight Asia. Yet, they will watch the US session carefully in search for a clearer trend for the market. Treasury direction will also be a driver for secondary trading as the US Treasury is set to issue more than USD70bn this week. (Christopher.Langner@thomsonreuters.com) Link this Share this Digg this Email Reprints

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