Asia Dollar Note Sales Slow to Least in 5 Weeks, Bond Risk Falls

Companies in the Asia-Pacific region slowed dollar bond sales to the least in five weeks amid economic data from China that may encourage policy makers to boost stimulus measures. Bond risk fell in Asia.

Issuers sold $1.9 billion of notes since Aug. 6, set for the slowest period since the week beginning July 2, according to data compiled by Bloomberg. No companies have sold bonds since Aug. 6, when Westpac Banking Corp. (WBC), China Petrochemical Corp. and Sound Global Ltd. (SGL) priced notes.

Inflation in China, the world’s second-biggest economy, cooled for a fourth straight month in July, rising 1.8 percent from a year earlier, the National Bureau of Statistics said today in Beijing. Consumer prices rose 2.2 percent in June. The deceleration provides more room for authorities to lower interest rates and combat an economic slowdown that’s lasted six quarters. Data in Australia meanwhile showed employers boosted payrolls in July, the fourth gain in five months. Markets in Singapore were closed for National Day.

“We’re right in the middle of a summer lull but Asia bond sales are on track for the busiest year ever,” Viktor Hjort, the head of Asia fixed-income research at Morgan Stanley, said in a phone interview from Hong Kong. “The consumer price data confirms inflation is not a problem in China any more. It’s now easy for policy makers to continue to ease policy as they have been doing all year.”

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 1 basis point to 148.5 as of 8:20 a.m. in Singapore, Royal Bank of Scotland Group Plc prices show. The index is on track for its lowest close since March 27, according to data provider CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

Bond Risk

The number of people employed in Australia rose by 14,000 last month versus a median estimate for a 10,000 increase in a Bloomberg News survey of 25 strategists. Stocks in Asia rose, extending gains the previous three trading sessions.

The Markit iTraxx Japan index decreased 1.5 basis points to 196 basis points as of 9:48 a.m. in Tokyo, Deutsche Bank AG prices show. The measure dropped 9.3 basis points yesterday, its biggest one-day fall since June 11, according to CMA.

The Markit iTraxx Australia index rose 0.5 basis point to 158 basis points as of 10:28 a.m. in Sydney, Westpac Banking Corp. prices show. The gauge touched a three-month low of 155.9 basis points on Aug. 6, CMA prices show.

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. A basis point is 0.01 percentage point.

To contact the reporter on this story: Rachel Evans in Hong Kong at revans43@bloomberg.net

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

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