Asia Dollar Bond Sales at Six-Week Low on Investor Summer Pause

Borrowers in the Asia-Pacific region sold the least dollar-denominated debt in six weeks, with Indian banks the only issuers as the summer holiday period continued. Bond risk dropped.

Sales fell 16 percent this week to $1.6 billion from the prior period, according to data compiled by Bloomberg. That’s the lowest since the week beginning July 2. ICICI Bank Ltd., Union Bank of India and Indian Overseas Bank were the only companies to foray into the market since Aug. 12, the data show.

Dollar bond sales in August total $3.5 billion, the slowest start to a month this year, the data show. August was also the least busy month for the region in 2011. Activity is traditionally reduced over the European summer and this year, investors also took a break for the London Olympic Games, according to Barclays Plc.

“August tends to be a slower month due to seasonal factors,” said Avanti Save, a Singapore-based credit strategist at Barclays. “The pipeline of issuers is building fast. We expect more supply from Indian banks, and companies in China and Hong Kong are also likely to be potential candidates.”

Bond sales slowed even as the cost of insuring Asia-Pacific corporate and sovereign bonds from non-payment dropped, according to traders of credit-default swaps.

Stocks Rise

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 3 basis points to 148 basis points as of 8:28 a.m. in Singapore, Royal Bank of Scotland Group Plc prices show. The index touched 147 basis points on Aug. 9, its lowest since March 19, according to data provider CMA.

The share of American households viewing the economy as heading in the wrong direction rose to 45 percent in August, the highest since November, as fuel costs and unemployment remained elevated, Bloomberg-compiled data released yesterday show. Stocks in Asia rose today as policy makers in Europe neared a consensus on helping indebted nations.

German Chancellor Angela Merkel said Europe’s biggest economy is “completely in line” with the European Central Bank’s approach to defending the euro, telling reporters in Ottawa yesterday policy makers “feel committed to do everything we can to maintain the common currency.”

The Markit iTraxx Australia index declined 2 basis points to 155 as of 11:07 a.m. in Sydney, Westpac Banking Corp. prices show. The gauge is set to match the lowest close since May 2, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

Bond Risk

The Markit iTraxx Japan index fell 1 basis point to 185 basis points as of 9:51 a.m. in Tokyo, Citigroup Inc. 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: 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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