NTPC Ltd. (NTPC) is marketing a sale of dollar-denominated bonds in the first such offering by an Indian non-financial company since February. Yields on notes in the U.S. currency in Asia fell to an almost two-year low.
The New Delhi-based generator, which supplies power to state electricity boards across India, is offering 10-year securities at about 325 basis points more than similar-maturity Treasuries, a person familiar with the matter said, asking not to be identified because the terms aren’t set. Average yields on dollar debt dropped to 4.13 percent last week, the lowest since November 2010, JPMorgan Chase & Co indexes show. Bond risk was little changed.
Issuers in the Asia-Pacific region are weighing cheaper borrowing costs with uncertainty about China’s growth and the European debt crisis, after the U.S. Federal Reserve loosened monetary policy earlier this month. Fixed-income assets should perform well as so-called quantitative easing steps increase liquidity, according to BOCI Securities Ltd.
“The global backdrop has improved to some degree,” said Steve Wang, the Hong Kong-based head of fixed-income research at BOCI Securities. “U.S. dollar yields are close to their lowest- ever levels so this remains very attractive to issuers.”
China South City Holdings Ltd. (1668) is considering a sale of five-year bonds and is meeting investors in Hong Kong today and Singapore tomorrow, a person familiar with the matter said. China Hongqiao Group Ltd. (1378) and China Resources Cement Holdings Ltd. (1313) also plan to hold talks with credit investors in Asia and Europe this week, other people said.
The last Indian non-financial company to sell dollar bonds was Reliance Industries Ltd., according to data compiled by Bloomberg. It issued $1.5 billion of 5.4 percent notes due 2022 via two sales in February. The bonds were yielding 4.45 percent as of 12:40 p.m. in Hong Kong, ING Groep NV prices on Bloomberg show.
The Markit iTraxx Asia Series 18 index of 40 investment- grade borrowers outside Japan was little changed at 133.5 as of 9:21 a.m. in Hong Kong Royal Bank of Scotland Group Plc prices show. The index has risen from a 14-month low of 112.6 basis points on Sept. 19, according to CMA prices.
The Markit iTraxx Australia Series 18 index was also little changed at 153 as of 10:40 a.m. in Sydney, according to Credit Agricole SA. The benchmark has ranged between 135.3 and 186 this quarter, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
The Markit iTraxx Japan index advanced 0.5 basis points to 212 basis points as of 9:39 a.m. in Tokyo, Deutsche Bank AG prices show. The measure is set for its highest close since 214.9 on May 21, according to CMA pricing on Series 17 of the index.
New versions of the benchmarks are created every six months when companies are added or dropped depending on their ratings, the cost of protecting their debt and the ease of trading their swaps. The maturity date of the new indexes, which started trading Sept. 20, is December 2017, compared with June 2017 on the Series 17 versions.
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.