Bloomberg News

China Cosco and ICICI Bank Market Debt; Asia Bond Risk Decreases

November 25, 2012

China Cosco Holdings Co., the nation’s largest listed shipping company, and India’s ICICI Bank Ltd. (ICICIBC) are marketing U.S. dollar-denominated debt. Bond risk in the Asia-Pacific region fell.

China Cosco is offering 10-year notes at about 275 basis points more than similar-maturity Treasuries while ICICI plans to sell $250 million more of its 4.7 percent bonds due February 2018, according to people familiar with the offerings, who both asked not to be identified because the details are private. The cost of insuring corporate and sovereign bonds in Asia is poised to fall to its lowest in a more than a month, according to Royal Bank of Scotland Group Plc and CMA prices.

Sales of dollar debt in the region slowed to $1.8 billion last week, the least in a month, as issuers paused for national holidays in the U.S. and Japan. The yield premium borrowers must pay to sell dollar notes is falling, dropping last week for the first time since the five-day period ending Oct. 19, according to HSBC Holdings Plc indexes.

“I’m expecting the pipeline to continue,” said Edwin Chan, the head of Asian credit research at UBS AG in Hong Kong. “As long as the window is open, issuers will continue to tap the market before year-end.”

ICICI is marketing its sale of additional 2018 notes at a spread of about 350 basis points more than U.S. government debt, a person familiar with the matter said. ICICI, based in Mumbai, and China Cosco, based in Tianjin, both plan to sell their bonds as soon as today, the people said.

Kookmin Meetings

Kookmin Bank, the Korean lender owned by the country’s second-largest financial group, meets investors in Hong Kong today, Singapore tomorrow and London on Nov. 28 and Nov. 29, a person familiar with the matter said today.

The yield premium on dollar bonds in Asia fell 0.4 basis points last week after increasing 8.4 basis points the week prior, HSBC indexes show. A basis point is 0.01 percentage point.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 2 basis points to 115 as of 8:15 a.m. in Hong Kong, RBS prices show. The gauge, which has ranged from 112.6 basis points to 175.3 basis points this half, is set for its lowest close since Oct. 18, according to CMA.

The Markit iTraxx Australia index decreased 3 basis points to 131.5 basis points as of 11:09 a.m. in Sydney, according to Westpac Banking Corp. The measure is set for its lowest close since March 19, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

Japanese Bonds

The Markit iTraxx Japan index also dropped 2 basis points to 174 basis points as of 9:30 a.m. in Tokyo, Citigroup Inc. prices show. The index, which has ranged from 168.5 to 229.5 this half, is headed for its lowest since July 6, according to CMA prices.

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.

To contact the reporters on this story: Rachel Evans in Hong Kong at revans43@bloomberg.net; Tanya Angerer in Singapore at tangerer@bloomberg.net

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


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