Keppel Land Ltd. (KPLD) is marketing dollar- denominated notes, its first public bond sale in the U.S. currency since 1995, as yield premiums for Asian issuers headed for the biggest annual drop in three years. Asia debt risk rose.
Keppel Land, a Singaporean property developer, is marketing $250 million of seven-year notes at about 235 basis points more than similar-maturity Treasuries as soon as today, Teri Liew, deputy general manager for corporate communications at parent Keppel Corp., said in an e-mailed response to questions. The cost of insuring corporate and sovereign bonds from non-payment in Asia advanced one basis point to 112.5 basis points, after falling to a 17-month low yesterday, prices from Royal Bank of Scotland Group Plc and CMA show.
Borrowers in the Asia-Pacific region have sold almost $215 billion of dollar bonds this year, almost double total issuance in 2011 and the most on record, according to data compiled by Bloomberg. Investors drove down average premiums on Asian dollar bonds to 269 basis points as of yesterday, from 374 basis points at the start of the year, according to JPMorgan Chase & Co. indexes.
“In general the market is still constructive,” said Annisa Lee, a Hong Kong-based credit analyst at Nomura Holdings Inc. “But deals will tend to slow down as we get to the end of the year.”
Keppel Land sold $200 million of five-year debt in December 1995 at a yield of 1.25 percent, according to data compiled by Bloomberg. Citic Pacific Ltd. (267) is marketing an increase of as much as $250 million to its existing January 2023 notes today, a person with knowledge of the matter said, asking not to be identified because the terms aren’t set.
Shui On Land Ltd. (272) raised $500 million from a sale of 10.125 percent perpetual bonds yesterday, according to data compiled by Bloomberg, after $5.65 billion of offerings last week, the busiest week since the period ended Oct. 12.
Global debt funds took in a net $5.17 billion in the week ended Nov. 28, according to research firm EPFR Global.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan slid to 109.2 yesterday, its lowest since July last year, 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 was little changed at 167 basis points as of 9:17 a.m. in Tokyo, Deutsche Bank AG prices show. The measure fell to 166.2 last week, its lowest since April 12, according to CMA. The Markit iTraxx Australia advanced half a basis point to 131 as of 11:04 a.m. in Sydney, according to Westpac Banking Corp. (WBC) prices.
The 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.