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Aus Primary Continues To Tick Along, Asia IG Spreads Near Lows

CREDIT UPDATE
  • Asian markets are trading mixed today as concerns over China’s financial sector weigh heavily. The Shanghai Composite Index dropped 0.6%, falling below the 2,800 mark, with banks leading the decline due to disappointing earnings and worries about the impact of potential mortgage refinancing on bank profitability. Asian equities were generally flat, with falls in Australia, Hong Kong, and South Korea, while Japan’s market showed modest gains despite a strengthening yen. Traders are also preparing for US economic data later in the week, which could influence Federal Reserve rate expectations.
  • Another busy day in the Australia primary markets, QBEAU has printed a A$ 10.75NC5.75 FRN at BBSW+195bps (initial guidance +210) and 15NC10 FXD at ASW+225 (initial guidance +240), while Telstra has priced a 6yr FXD at ASW+105bps, still to come this week we have ANZ perp, Qantas, a bunch of A$ ABS/RMBS deals & Woodside's USD 10y and/or 30yr.
  • In secondary today, we are little changed, there wasn't much selling to fund the QBEAU deal due to such heavy scaling on the deal. Looking at the new Tier 2 deals recently MQGAU which priced at +185bps has performed the worst and trades just -2bps, while the BNP & Lloyds deals are both trading about -5bps. Elsewhere, Snr Bank debt is steady today, slightly better buying through the short-end, while corps have seen decent two-way as investors position ahead of upcoming deals.
  • Spread on Asia IG bonds continue to creep lower and now trade just 5bps off pre August 5 levels and about 10bps off all time lows made in June this year. Today we are trading little changed, with very few headlines to drive prices. There was small bounce in property stocks, although that has done little to support the bond market, there has been some weakness in Indonesian sovs ahead of the 10yr & 30yr deal expected to price tonight, otherwise it has been a quiet session.
  • Indonesia are in the market for 10y & 30y bonds, with pricing currently 35bps & 42bps outside debt curve of the issuer’s existing international bonds. This issuance follows the Philippines issues USD debt last week and will likely be well support from foreign investors as flows into Asia EM bonds have been strong especially into Indonesia over the past month.
  • Aus iTraxx CDS is unchanged at 61.5bps & while Asia Ex-J iTraxx is 1bp higher at 94bps
  • Primary: Meiji Yasuda Life $Bmrk 30NC10 Sub Notes, Orix $Bmrk 5Y at +130 area, Indonesia SEC Registered $Benchmark; 10Y 5.15%a, 30Y 5.5%a
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