Traders faced a round of profit-taking as investors tried to cash in on a US Treasury rally that buoyed cash prices of Asian investment-grade bonds this week. Most bonds with a high correlation to Treasuries were under pressure, as a result.
"There is no Treasury market on Monday because of the (Martin Luther King Day) holiday in the US, so investors want to square off positions today," said a trader.
The old 2023s of Sinopec, for instance, were last quoted at a mid-market spread of 163bp over US Treasuries, 4bp wide to where they were being quoted yesterday. Even the new 2024s bonds of KNOC were not immune and they widened by about 3bp to close at 115bp/111bp.
Sovereign bonds were a bit more resilient as they stuck to their spread over the US benchmark. The new 2024s of the Philippines were quoted at 101.85/102.00, stronger in price terms, while the 2044s of Indonesia were at 102.00/102.50. Both were reflecting the overnight gains in US Treasuries.
The new Bank of Baroda 2019s widened slightly, last quoted at 324bp over US Treasuries, after having closed yesterday at 320bp, 5bp tight to reoffer.
However, the rest of the Indian FIG sector tightened by about 3bp on average, with ICICI 2018s last quoted at 296bp, a recent tight for the name.