Bloomberg News

CIFI Holdings, Stats Chippac Plan Dollar Debt as Bond Risk Holds

February 14, 2013

CIFI Holdings Group Co. and Stats Chippac Ltd. are among companies considering dollar-denominated notes as the Lunar New Year holidays come to an end. Bond risk in the region was little changed.

Chinese real estate developer CIFI hired Citigroup Inc., Deutsche Bank AG, HSBC Holdings Plc, Royal Bank of Scotland Group Plc and Standard Chartered Plc to arrange investor meetings next week, according to a person familiar with the matter. Stats Chippac, the Singapore-based semiconductor tester and assembler controlled by Temasek Holdings Pte, is also planning a security due in 2018 with a coupon of not less than 4 percent, according to a company statement yesterday.

The Republic of Indonesia and China State Construction International Holdings Ltd. have also hired banks for possible bond sales. Issuance dropped in Asia outside Japan this month after companies raised a record $23.4 billion in January, data compiled by Bloomberg show. Yield premiums on dollar debt in the region fell to a two-week low of 261 basis points more than Treasuries yesterday, a JPMorgan Chase & Co. index shows.

“New deals will start to emerge next week,” said Brayan Lai, an analyst in emerging-market credit trading at Jefferies Group Inc. in Singapore. “But with earnings season still going on in Asia until April, some companies will hold off until then.”

Stats Chippac plans to exchange all $600 million of its outstanding 7.5 percent bonds due 2015 for the new securities, according to the company statement.

Bond Risk

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan held at 110.5 basis points as of 8:08 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge last closed at a lower level on Jan. 29, according to data provider CMA.

The Markit iTraxx Australia index was at 112.5 as of 11:07 a.m. in Sydney, according to Westpac Banking Corp. prices. The benchmark closed at the same level yesterday, the lowest since Jan. 10, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.

The Markit iTraxx Japan index climbed 1.5 basis points to 121.5 basis points as of 9:17 a.m. in Tokyo, according to Citigroup Inc. 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 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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