Indonesian High-Yield Market Has 1998-Like Vibes - Market Talk

0910 GMT [Dow Jones] The question traders of Asian high yield debt are asking is, "Are we seeing a repeat of 1998?" So asks Charles Macgregor, head of Asia at Lucror Analytics, saying that the recent selling of Indonesian credits is reminiscent of the Asian financial crisis. Among the more attention-grabbing names, 2018 U.S. dollar bonds from feedstock provider Japfa are yielding 20%, and 2018 USD bonds from tire-maker Gajah Tunggal yield an eye-watering 26%. The pressures felt by Indonesian high-yield are emblematic of a wider theme in Asia: the difficulty of servicing foreign currency debt as local currencies dwindle in value. Indicative of investors' growing sense of systemic risk in emerging Asia, spreads on five-year Indonesian credit default swaps have widened from 132 basis points in February, to 209 basis points today. "There are few investors that are actively trading (Indonesian high yield), so there are few interested parties, so that has a negative feedback on the price," says Macgregor. "Investors may be thinking about what kind of return they need to invest in Indonesia."