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(Corrects record-low figure for Asian corporate bond yields in third paragraph of story published yesterday.)
Nippon Life Insurance Co., Japan’s biggest life insurer, is considering selling dollar-denominated debt as Asian bond risk falls.
Nippon Life is planning meetings with fixed-income investors and may offer 30-year subordinated bonds that can be bought back by the company after 10 years, said a person familiar with the matter, who asked not to be named because the terms aren’t set. An index of credit-default swaps on borrowers in Asia outside Japan is poised to decline for sixth straight trading day, according to Credit Agricole SA (ACA) and CMA data.
Borrowing costs for Asian companies in dollars fell to a record low of 3.48 percent yesterday, according to HSBC Holdings Plc indexes, as benchmark interest rates in the U.S. hold near zero for a fourth year. Worldwide corporate issuance reached $986 billion in the three months ended Sept. 30, the busiest third quarter ever, as global central bank stimulus prompted investors to reach for higher-yielding assets.
“The favorable sentiment towards the primary market is still rife,” said Louisa Lam, a Hong Kong-based credit analyst at HSBC. “With U.S. interest rates at historic lows, Asia’s companies will seize the window to raise funds, so issuance will continue into October.”
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 1 basis point to 131 basis points as of 8:13 a.m. in Hong Kong, Credit Agricole prices show.
The Markit iTraxx Australia index declined 2 basis points to 154 as of 10:12 a.m. in Sydney, according to Westpac Banking Corp. (WBC) The measure is on course for the lowest close since Sept. 21, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
The Markit iTraxx Japan index dropped 4 basis points to 219 as of 9:11 a.m. in Tokyo, Citigroup Inc. prices show. The gauge is on track for the lowest close since Sept. 24, according to data provider CMA.
Credit-default swap indexes are benchmarks for protecting bonds against default and traders use them to speculate on credit quality. A drop signals improving perceptions of creditworthiness, while an increase suggests the opposite.
The swap contracts pay the buyer face value in exchange for the underlying securities if a borrower fails to meet its debt agreements. A basis point is 0.01 percentage point.
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