Brekkie Bond Wrap

Daily Credit Wrap:

 Investment Grade:

It was an active session in the Asian credit markets with spreads consolidating across sectors. Underlying tone remains relatively firm though markets did give back some gains on the soft China PMI print. In the IG space, NOBLE bonds continues to be active across the curve, with prices about ½ point lower on the day. Petronas closed better bid with spreads about 3 bps tighter. In the primary space, Exim Bank India printed a 5yr USD500mm deal at T+147.5. Final books were in excess of US$1.6b.

 High Yield:

Chinese real estate names were stronger again despite the weaker macro backdrop, though industrials and energy related names were mixed. Indon names outperformed on good demand from EM funds. It was quiet elsewhere.

 Thoughts:

I would expect credit markets to continue to be range bound, with a slightly positive bias as long as oil does not take another turn south. The IG new issue market should continue to be busy as stability returns to the markets. Corruption/corporate governance concerns will continue to weigh on the Chinese property bonds, and I would expect the big cap names to outperform in such an environment.