Asia Bonds Pause After $1.9 Billion of Sales, Debt Risk Steadies

Borrowers from the Asia-Pacific region sold the least U.S. dollar-denominated debt in five weeks as companies paused offerings to report earnings results. Bond risk in Asia held at the lowest since March.

Sales declined 12 percent from a week earlier as China Petrochemical Corp., Sound Global Ltd. (SGL) and Westpac Banking Corp. (WBC) raised $1.9 billion on Aug. 6, with no issuance after the first day of the week, according to data compiled by Bloomberg. A gauge of bond insurance costs in Asia was little changed today at the least since March 19, according to Royal Bank of Scotland Group Plc prices and historical data from CMA.

More than 150 companies in the MSCI Asia Pacific (MXAP) index have announced quarterly results this month, with businesses reporting aggregate sales growth of 7.5 percent, according to data compiled by Bloomberg. Market activity has been reduced as investors break for the London Olympics and a Singapore public holiday on Aug. 9, according to Credit Agricole SA. (ACA)

“Regional supply will really ramp up in September once earnings season is over,” said Mark Reade, a credit desk analyst at Credit Agricole. “With the Olympics about to end in Europe and Singapore back on deck post National Day, we should start to see issuance pick up as investors return to the office. We anticipate a busy second half.”

Bond Risk

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan was little changed at 146.5 basis points as of 8:36 a.m. in Singapore, RBS prices show. The index fell yesterday to its lowest since March 19, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Australia index was also little changed at 157 basis points as of 11:01 a.m. in Sydney, Westpac prices show. The gauge closed yesterday at its lowest since May 2, according to CMA.

The Markit iTraxx Japan index decreased 2 basis points to 185 basis points as of 9:21 a.m. in Tokyo, Deutsche Bank AG prices show. The measure has fallen 19 basis points since Aug. 7, its biggest two-day drop since May 28, CMA data 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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