Asia-Pacific dollar-denominated note sales rose to a seven-week high as issuers marketed debt ahead of year-end holidays. Bond risk fell.
Mongolia and China Development Bank Corp. led $5.25 billion of offerings, almost three times the previous week and the most since the five-day period ended Oct. 12, according to data compiled by Bloomberg. The cost of insuring Asian corporate and sovereign bonds with credit-default swaps is poised to close at the lowest level since July 2011, according to prices from Royal Bank of Scotland Group Plc and data provider CMA.
“Issuers are coming to the market before the market quietens down at the end of the year due to holidays,” said Pang Cheng Duan, who helps manage part of the $38.6 billion of Asian fixed-income securities as head of debt in Singapore at Manulife Asset Management. “Liquidity is abundant and there is a lot of money to be put to work.”
With only three full weeks now remaining until issuers break for the Christmas holidays, investors are channeling money into emerging markets. More than $1 billion flowed into bond funds dedicated to less developed countries in the week to Nov. 21, according to research firm EPFR Global.
Issuers from the Asia-Pacific region sold $16.7 billion of notes in November, 15 percent less than last month, according to data compiled by Bloomberg. Companies and sovereigns offered almost $214 billion of debt in the U.S. currency this year, the data show.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell one basis point to 110 basis points as of 8:28 a.m. in Hong Kong, Royal Bank of Scotland prices show. The gauge has dropped from 206.3 at the start of 2012 and has fallen 7.9 basis points in November, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
The measure is a benchmark for insuring bonds against default which traders use to speculate on debt quality. A drop signals improving perceptions of creditworthiness. The swap contracts pay the buyer face value in exchange for the underlying securities should a borrower fail to meet its debt agreements.
The Markit iTraxx Australia index dropped one basis point to 130 as of 11:27 a.m. in Sydney, according to Australia & New Zealand Banking Group Ltd. The measure is set to fall 9.1 basis points this month and 50.5 this year, CMA prices show.
The Markit iTraxx Japan index shed one basis point to 169 as of 9:17 a.m. in Tokyo, Deutsche Bank AG prices show. The index is on track to fall 34 basis points this month, the biggest monthly decline since October 2011, according to CMA.
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