Credits hold up, but investors look overseas

SINGAPORE: Asian credits tightened slightly, but there is a sense that the region's bonds look expensive relative to other regions.

"We are seeing a slight shift of focus to US investment grade by Asian investors," said an analyst. "They are not selling Asian IG to buy US IG, but if they have an extra dollar they put it into US paper."

The Asia ex-Japan iTraxx investment grade index tightened 1bp to 144bp/145bp and the Japanese index came in 5bp to 80bp/82bp.

Evergrande Real Estate Group's 2020 bonds were unchanged at 107.25 bid after dropping two points on Monday, when S&P downgraded it two notches.

Its senior unsecured notes are now rated CCC+ and could face forced selling.

Many real-money investors are not allowed by their mandates to hold bonds which are rated Triple C by two rating agencies and some investors are expected to sell now, in case a second agency downgrades it later.

CAR Inc's 2020 bonds dropped around half a point to 103.0 after both the CEO and COO left to join a rival.