Asia-Pacific sales of dollar- denominated bonds slowed to the least in a month this week as issuers paused for national holidays in the U.S. and Japan. Bond risk in the region fell.
Baidu Inc. (BIDU:US), the owner of China’s most popular search engine, led $1.8 billion of debt sales, 54 percent less than last week and the least since the five-day period ending Oct. 26, according to data compiled by Bloomberg. U.S. markets closed for Thanksgiving yesterday while Japan shuts today.
“It’s the Thanksgiving effect,” said Mark Reade, a credit desk analyst at Credit Agricole SA in Hong Kong. “That, combined with the year-end effect, which I think will see issuance progressively slow then ultimately stop as we approach mid-to-late December.”
Asian companies face paying more to sell dollar debt after average yield premiums climbed 23 basis points to 269.9 basis points from a 2 1/2-year low reached Oct. 19, according to HSBC Holdings Plc indexes. Global A&T Electronics Ltd. postponed a planned bond sale this week, with three people familiar with the matter citing market conditions for the delay.
The cost of insuring corporate and sovereign bonds from non-payment in the Asia-Pacific region is on track for its first weekly decline since the period ending Nov. 2, according to traders of credit-default swaps and data provider CMA.
The Markit iTraxx Australia index fell two basis points to 134 basis points as of 11:13 a.m. in Sydney, according to Westpac Banking Corp. (WBC) prices. The benchmark is set for its lowest close in more than a month, according to CMA which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan decreased one basis point to 114.5 as of 8:18 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge is poised for its lowest close since Oct. 18, CMA prices show.
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.
-- With assistance from Tanya Angerer in Singapore. Editors: Sarah McDonald, Shelley Smith
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