SINGAPORE: Volume in the Asian credit markets in the morning session was extremely thin with traders unwilling to take positions ahead of today's Thanksgiving holiday in the US given that Treasuries will be unavailable to hedge fresh positions.
The mood is extremely gloomy on the back of a host of underlying risk factors, including the ongoing European debt crisis, weakness in the Chinese economy and the impasse on fixing the US budget deficit.
Investment grade Asian paper is wider by between 5bp to 10bp, with CDS between 4bp to 13bp wider.
The iTraxx IG series 16 is 9bp wider at 230bp-237bp, with the wide spread a reflection of general market illiquidity.
Concerns about the health of the Chinese economy given yesterday's weak PMI number has filtered into the China bank space. The Bank of East Asia2022 Lower Tier 2 paper is out at Treasuries plus 555bp bid, having been reoffered in late October at plus 400bp and wider by 15bp on the day. The Bank of China 2016s is 7bp wider at plus 288bp bid.
Elsewhere in IG, the recent KOFC 2021s are 10bp wider at plus 220bp while the CNOOC 2021s and the Beijing Enterprises 2021s are each 10bp wider at plus 210bp and plus 295bp respectively.
As a measure of their high beta risk, perps are under pressure as demonstrated by the CKI perps which is now bid at 88, or two points weaker from yesterday, having been reoffered at par. Interestingly, the Hutch perps has held in well and is unchanged on the day at 98 bid.
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