Credit-default swap trading on Hong Kong blue chip Hutchison Whampoa doubled last week after Moody's Investors Service changed its outlook. Mid-last week Moody's affirmed Hutchison's rating at A3 but upgraded the outlook to stable from negative. A report by the ratings agency attributed the outlook change to improving prospects for the companies' 3G business, strong cash on the balance sheet and growth in its established businesses. Volumes last Thursday swelled to about USD50 million, whereas in a typical week the credit trades about half that amount. Last week 10-year protection tightened 10-13 basis points to 68-73bps on Thursday.
"This is a positive start to the year," said a trader at JPMorgan. Market officials noted that while credit spreads have remained tight, partly due to continued issuance of structured products, clients who had initially been waiting for wider levels are starting to execute trades. Some, however, are shifting toward 10-year trades for higher yield and this trend was seen on Hutchison last week.
