Sinopec Group Leads Dollar Debt Sales as Asia Bond Risk Tumbles
China Petrochemical Corp., known as Sinopec Group, is planning the first U.S. dollar-denominated note sale by an Asian issuer in almost a week, according to a person familiar with the matter. Bond risk in the region fell to a more than four-month low, Credit Agricole SA (ACA) prices show.
Sinopec Group is marketing an increase to its May 2022 notes at about 155 basis points more than Treasuries to raise as much as $500 million, the person said, asking not to be identified because the details are private. Sound Global Ltd. (SGL), a Chinese water treatment provider, is considering pricing five- year debt in the low 12 percent area as soon as today, another person said, also seeking anonymity.
The sales would be the first in dollars by the region’s issuers since July 31 after the U.S. economy added more jobs than expected and an agreement between Greece and its creditors to boost efforts to comply with its bailout terms tempered concern Asian growth may slow and increased perceptions of corporate creditworthiness.
“The Asian market should see some positive momentum today flowing from the better-than-expected U.S. employment data and optimism out of Europe,” said Raymond Lee, a portfolio manager in Sydney at Kapstream Capital Pty which oversees the equivalent of about $4.75 billion. “The improved risk sentiment should see some added demand for Asian bonds.”
Sinopec Group plans to increase the $1 billion 10-year notes it sold in May as early as today, the person familiar with the matter said. Sound Global is debuting in the dollar market after selling 885 million yuan ($139 million) of convertible debt in 2010, according to data compiled by Bloomberg.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan decreased 5 basis points to 153 basis points as of 11:52 a.m. in Singapore, Credit Agricole prices show. The index is set for its lowest close since March 27, according to CMA.
U.S. employers added 163,000 workers in July, 63 percent more than expected, according to a median estimate of 89 analysts before the Aug. 3 release.
In Europe, there is “overall agreement on the need to strengthen policy efforts” to help Greece meet its bailout terms, representatives from the European Commission, European Central Bank and International Monetary Fund said yesterday after meeting the country’s Finance Minister Yannis Stournaras in Athens.
The Markit iTraxx Australia index fell 6 basis points to 162 basis points as of 1:52 p.m. in Sydney, Credit Agricole prices show. The gauge is on course for its lowest close since May 4, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
The indexes are benchmarks for insuring bonds against default and traders use them to speculate on credit quality. A drop signals signals improving perceptions of creditworthiness.
The swap contracts pay the buyer face value in exchange for the underlying securities if a borrower fails to meet its debt agreements. A basis point is 0.01 percentage point.