Fantasia Holdings Group Co. (1777) is marketing dollar-denominated bonds while South Korea’s Doosan Infracore Co. (042670) and Mongolia’s XacBank consider sales after yield premiums on notes from Asia dropped to a 15-month low. Debt risk was little changed.
Fantasia, a Shenzhen-based property developer, plans to sell five-year bonds this week, while Doosan Infracore and XacBank are meeting fund managers this week ahead of possible offerings, according to people familiar with the deals. Spreads on dollar bonds from Asian borrowers narrowed to 280 basis points more than Treasuries yesterday, the least since May 31, 2011, according to an HSBC Holdings Plc index.
“Funding conditions will remain very attractive for corporates if, as we expect, Treasury yields stay low and credit spreads continue grinding in,” said Mark Reade, a credit desk analyst at Credit Agricole SA (ACA) in Hong Kong. Borrowers “would be sensible to start thinking about their late 2013 and 2014 funding needs.”
Investors are piling into riskier assets as policymakers from Japan to Europe and the U.S. announce stimulus measures to avoid a global slowdown. Asian bond funds had 16 straight weeks of inflows as of Sept. 12, according to EPFR Global. Bangkok Bank PCL (BBL) and Westpac Banking Corp. sold $3.45 billion of notes yesterday in the busiest day for offerings from the region since Sept. 10, data compiled by Bloomberg show.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan was little changed at 116 basis points as of 9:03 a.m. in Hong Kong, Credit Agricole prices show. It dropped to 114 on Sept. 14, the lowest since July 2011, according to data provider CMA.
Fantasia may price the dollar-denominated notes in the low- to mid-14 percent range, the person familiar with the matter said, declining to be identified because the terms aren’t yet set.
Doosan Infracore, the Incheon-based construction-equipment maker, starts talks with debt investors tomorrow and may seek to sell 30-year bonds that are callable after five years, the person familiar said. XacBank meets asset managers in Hong Kong and London from today, and its debut dollar offering may follow, another person said.
ArcelorMittal (MT), the world’s biggest steelmaker, is also planning meetings with fixed-income investors, a separate person said today. The Luxembourg-based company is considering a sale of hybrid notes in dollars, the person said.
Bangkok Bank sold $1.2 billion of 5 1/2 and 10-year bonds in its first sale in the U.S. currency in almost two years yesterday, while Westpac priced $2.25 billion of fixed- and floating-rate notes, data compiled by Bloomberg show.
Australia, Japan Swaps
The Markit iTraxx Australia index rose 1 basis point to 139 basis points as of 10:46 a.m. in Sydney, according to Westpac Banking Corp.. (WBC)
The Markit iTraxx Japan index climbed 1 basis point to 193 as of 9:41 a.m. in Tokyo, Citigroup Inc. prices show.
Credit-default swap 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. A basis point is 0.01 percentage point.