Siam Commercial Markets Dollar Debt as Asia Bond Risk Unchanged

Siam Commercial Bank Pcl (SCB) is seeking to increase the size of its September 2017 dollar-denominated notes while National Agricultural Cooperative Federation markets new debt. Asia bond risk was little changed.

Siam Commercial is considering paying about 230 basis points more than similar-maturity Treasuries to boost the size of its outstanding bond, a person familiar with the matter said, asking not to be named because the details are private. National Agricultural, a Korean lender known as Nonghyup, is offering $500 million of five-year notes at a premium of about 180 basis points, another person said.

Perceptions of corporate and sovereign creditworthiness in Asia were little changed today after a benchmark credit-default swap index tumbled 20 basis points last week to the lowest since March. The U.S. Federal Reserve meets this week to discuss whether to expand asset purchases, after employers added fewer jobs than economists expected in August. Chinese President Hu Jintao pledged to boost domestic demand to stimulate the world’s second-biggest economy.

“We’ll continue to see markets supported by the central banks,” as deteriorating economic data suggests more action is needed, said Owen Gallimore, head of Asia credit strategy at Australia & New Zealand Banking Group Ltd. (ANZ) “It should be a very big month,” for Asian bond issuance, he said.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan was little changed at 133.5 basis points as of 8:08 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. It had the biggest weekly drop since March last week, price from data provider CMA show.

Issuance Forecast

Issuers in the Asia-Pacific region sold $8.4 billion of bonds in the five days to Sept. 7, the most in eight weeks, according to data compiled by Bloomberg.

Dollar bond offerings from Asian borrowers excluding those from Japan and Australia may exceed $100 billion this year, Gallimore said.

Trade & Development Bank of Mongolia LLC plans to meet investors in Singapore today, Hong Kong tomorrow, and London on Sept. 12 for a possible dollar-denominated bond sale, a person familiar with the matter said last week.

Moody’s Investors Service plans to give Trade & Development Bank’s proposed bonds a B1 rating, four levels below investment grade, it said in a Sept. 7 statement. Siam Commercial’s notes will be rated BBB+, Fitch Ratings said today.

Australia, Japan

The Markit iTraxx Australia index fell 1 basis point to 149 as of 10:39 a.m. in Sydney, according to Westpac Banking Corp. (WBC) The index dropped 21 basis points last week, its biggest weekly decrease since the first week of December, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market. A basis point is 0.01 percentage point.

The Markit iTraxx Japan index increased 1 basis point to 199 as of 9:24 a.m. in Tokyo, Citigroup Inc. prices show. The benchmark fell 14 basis points last week, its biggest decline since the five days ended June 15, according to CMA.

The indexes are benchmarks for protecting 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.

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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