Bloomberg News

Asian Dollar Bond Sales Pause After Surging to Four-Month High

January 13, 2013

Companies in Asia took a breather from marketing U.S. dollar-denominated bonds after offerings surged last week to a four-month high. At least three issuers are planning deals in coming days.

Shimao Property Holdings Ltd. led $6 billion of debt sales from Asia excluding Japan last week, the most since September, according to data compiled by Bloomberg. Hopson Development Holdings Ltd. priced $300 million of notes, ranked Caa1 by Moody’s Investors Service, to yield 9.875 percent after marketing the securities at as much as 10.5 percent, according to a person familiar with the offering.

“Investors are stepping away from the market to digest the deals as pricing has been quite expensive,” said Brayan Lai, an analyst in emerging-market credit trading at Jefferies Group Inc. in Singapore. “Yields on deals have been really low but that’s not going to last.”

Average premiums on U.S. currency bonds in Asia rose to 250 basis points more than Treasuries on Jan. 11 after touching a 20-month low of 245 basis points on Jan. 7, according to JPMorgan Chase & Co. indexes. Yuexiu Property Co., Thai Oil Pcl and PT Indika Energy Tbk are considering offerings, people familiar with the deals said last week.

In the broader Asia-Pacific region, National Australia Bank Ltd. is marketing U.S. dollar notes in three maturities, including 10-year bonds at a yield of about 120 basis points more than Treasuries, a person familiar with the matter said.

Bond Risk

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan was little changed at 106 basis points as of 8:50 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The measure has declined 7.4 basis points this year, after falling 93 basis points in 2012, according to data provider CMA.

The Markit iTraxx Australia index rose 0.5 of a basis point to 113.5 as of 11:34 a.m. in Sydney, according to Westpac Banking Corp. prices. The gauge has fallen 14 basis points since Dec. 31, extending a 53 basis-point drop in 2012, CMA data show.

Markets in Japan are closed today for a public holiday.

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 reporter on this story: 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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