Bloomberg News

Soho China Eyes Bond as Dollar Sales Fall to Near Four-Month Low

October 26, 2012

Soho China Ltd. (410), a Beijing-based property developer, is considering its first sale of dollar- denominated debt as weekly sales by Asia-Pacific issuers slump to the least in almost four months.

Soho China hired Barclays Plc, Goldman Sachs Group Inc., HSBC Holdings Plc, Morgan Stanley and Standard Chartered Plc to arrange investor meetings before a possible offering of bonds in the U.S. currency, according to a statement on the Hong Kong stock exchange website. The city’s Wing Lung Bank and South Korea’s SK Telecom Co. raised $900 million from dollar notes this week, the lowest issuance from the Asia-Pacific region since the beginning of July, data compiled by Bloomberg show.

Borrowers reduced offerings by 83 percent from the previous period as markets in Hong Kong, Singapore, Malaysia, Indonesia and India closed for national holidays. Bond risk in Australia and Asia outside of Japan is on track to rise for the first week this month, according to credit-default swap traders.

“The holidays around the region have stalled sales in the short term,” said Bryan Collins, a Hong Kong-based fixed income portfolio manager at FIL Ltd., known as Fidelity Worldwide Investment. “The rush of new issues last week and fact that some didn’t perform so well in the secondary market may have persuaded others to take a break.”

Relative yields on Asian dollar bonds rose to 261 basis points more than Treasuries yesterday, from 250 at the end of last week, according to a JPMorgan Chase & Co. index.

The yield premium on PTT Pcl (PTT)’s bonds due 2022 widened to 176 basis points as of 10.28 a.m. in Hong Kong, from an issue spread of 160 on Oct. 18, prices from BNP Paribas SA and data compiled by Bloomberg show. The Thai company sold $500 million of the 3.375 percent bonds last week as well as $600 million of 30-year, 4.5 percent notes.

Bond Risk

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan is poised to climb 1.5 basis points this week, CMA and Royal Bank of Scotland Group Plc prices show. The gauge was trading at 118.5 as of 8:12 a.m. in Hong Kong, according to RBS.

The Markit iTraxx Australia index was little changed at 141 as of 11:12 a.m. in Sydney, according to Westpac Banking Corp. The index closed at 137.5 last week, 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 climbed 1 basis point to 204 as of 9:07 a.m. in Tokyo, Deutsche Bank AG prices show. The index, which has ranged from 168.5 to 229.5 since June, is on track to decline 4 basis points this week, according to CMA.

Credit-default swap indexes are benchmarks for insuring 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.

To contact the reporter on this story: Rachel Evans in Hong Kong at revans43@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net


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