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Far East Rising Risks

11 August 2015 by pdonnat

The iTraxx Asia Ex Japan Series 23 credit index is the benchmark that investors should monitor over the next sessions. It includes 40 credits, including most Asian sovereign credits. The index is closing 5 bps wider at 118, with little protection on the index offered in the market. Over the last 2 weeks, Asian sovereign credits have initiated a trend weaker as you can observe on the Grapple. Today, China CDS is closing 4 bps wider at 107bps but Indonesia, Thailand and Malaysia are much weaker, closing around 8bps wider. For most of the Asian sovereign CDS, we are trading at the widest levels since last summer. The increase of the credit premiums for these economies has to be monitored as it could trigger a more pronounced selloff.