Powerlong Real Estate Holdings Ltd. (1238) is marketing dollar-denominated notes as bond risk in the Asia- Pacific region falls. Yield premiums are poised to climb the most this week since September.
The Shanghai-based developer is offering five-year securities yielding about 12 percent, according to a person familiar with the matter who asked not to be identified because the terms aren’t set. The cost of insuring Asia-Pacific corporate and sovereign debt from non-payment dropped today, extending a decline this year.
Powerlong’s offering comes as sales slow this week to $9.05 billion, from a six-month high of $13.9 billion in the five business days ended Jan. 11, according to data compiled by Bloomberg. Yield premiums on dollar notes in Asia are set for the largest jump in sixteen weeks, after advancing 9 basis points from last week to 259 basis points more than Treasuries yesterday, according to JPMorgan Chase & Co. indexes.
“Although there’s ample liquidity in the markets, people need time to digest,” said Louisa Lam, Hong Kong-based credit analyst at HSBC Holdings Plc. “There are so many new issues that have come in recent weeks and there are so many still in the pipeline. That’s why the market paused a bit recently.”
The spread on Yuexiu Property Co.’s 2023 bonds, which priced at 275 basis points more than Treasuries on Jan. 16, widened 24 basis points to 299 basis points as of 10:51 a.m. in Hong Kong, according to prices quoted by Royal Bank of Scotland Group Plc. KWG Property Holding Ltd. (1813), the Hong Kong-listed developer whose projects include the five-star Sheraton Huadu Resort in Guangzhou, pulled an offering of perpetual bonds in dollars this week.
Cosco Pacific Ltd. (1199) is planning a dollar bond to be sold through a unit, according to a statement on the Hong Kong stock exchange. BOCI Asia Ltd., Deutsche Bank AG, JPMorgan and UBS AG will arrange the note sale, according to the filing.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan dropped three basis points to 106 basis points as of 8:31 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge has fallen seven basis points this year, according to data provider CMA.
The Markit iTraxx Japan index fell three basis points to 138.5 as of 9:28 a.m. in Tokyo, Citigroup Inc. prices show. The benchmark is on track for its lowest close since Jan. 11, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.
The Markit iTraxx Australia index retreated two basis points to 115 as of 11:50 a.m. in Sydney, according to Australia & New Zealand Banking Group Ltd. (ANZ) The measure has dropped 12.5 this year, according to CMA.
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.