Brekkie Bond Wrap

Investment Grade:
Asian IG credits traded with a slightly firmer tone. Sovereign CDS was a touch tighter while Chinese/HK spreads also ended tighter. Chinese oil and tech names were 1-2bps tighter. The new PCCW 25s (priced at Treasury + 178) opened up 5 bps tighter and traded as tight as T+167 before some profit-taking set in. The Petronas complex continues to see constructive price action despite a continued softening in oil prices.

High Yield:
Asia HY was very strong on Tuesday, with bonds closing ½ – 1 point higher led by the Chinese property sector. Names like GZRFPR, COGARD and SUNAC were active with strong demand from real money accounts. Underperformer was Evergrande which closed 1 point lower after their earnings release which showed higher gearing despite strong sales. Kaisa’s stock was suspended on the delay of their 2014 annual report, and bonds were down 2 points. Oil-related names saw a few ratings downgrades with Moody’s downgrading Honghua to B3, and both Fitch and Moody’s downgrading Anton Oil to B+ and B2 respectively. Rest of the industrial space was strong, closing up ½ – ¼ point.