According to reports, five new deals yesterday took centre stage today in Asian secondary credit markets, with the attention on the 5-year bonds from wind-turbine maker Suzlon.
The 2018s, with the backing of a State Bank of India standby letter of credit, was the worst-performing bond among the five, widening some 20bp in the morning from 419bp over US Treasuries, the level at which priced. Quotes hovered at that level for the rest of the day.
“That deal was a bit tricky,” said a Singapore-based trader. “The borrower had defaulted on a convertible bond last year and, in view of that, there was no upside to its notes.
Then again, there was also no downside since there is the SBLC from SBI. You don’t really want to put in your funds for a small return for the next five years.”
China State Construction’s new bonds fared just as poorly, after it fixed a USD500m 5-year issue at a spread of 240bp last night.
The notes gapped out to as much as 252bp before they rebounded to 244bp/242bp in the late afternoon as retail buyers came in to pick up the paper. This retail bid is expected to continue to support the bonds.
On the other hand, the remaining three new issues were doing better. High-grade Korea Exchange Bank’s 5-year paper tightened slightly to 128bp in the morning before returning to the 130bp reoffer level. However, trade was minimal on the deal.
Bharti Airtel’s tap of its 5.125% due 2023 priced at 100.625 and were holding up well, with indications at 100.75. High-yield issuer Tower Bersama also saw a healthy bid for its new bonds, which traded up, as levels hit 100.50/100.75 in the afternoon, once again underlining continuing demand for high-yield paper from the South-East Asian markets.
Overall, market tone was slightly soft and was reflected in the widening of Asian credit spreads. The IG index was quoted at 118bp/120bp, out from 115bp/117bp quoted yesterday evening.