HDFC Bank Ltd. (HDFCB), India’s largest lender by market value, is marketing a U.S. dollar-denominated bond as the Republic of Indonesia and AIA Group Ltd. (1299) line up investor meetings. Debt risk in Asia fell.
The Mumbai-based company is offering five-year notes at about 255 basis points more than Treasuries, according to a person familiar with the matter. Southeast Asia’s largest economy plans to meet investors in Europe and the U.S. from March 1 to March 8, while insurer AIA Group’s talks begin tomorrow, other people said.
HDFC’s deal will add to the $3.4 billion of dollar bond sales this month in Asia, outside of Japan, according to data compiled by Bloomberg. Offerings have slumped 85 percent from an all-time monthly high in January as investors took time off for lunar new year holidays and spreads widened.
“We had a record level of new issuance in January and overall the secondary trading has been fairly weak,” said Luc Froehlich, a Hong Kong-based portfolio manager with Manulife Asset Management’s Asia fixed-income team, which oversees more than $43 billion. “Issuers are therefore less keen on rushing to the primary market and negotiations with syndication desks are taking longer.”
Yield premiums on U.S. currency debt from the region climbed to a two-week high of 265 basis points more than Treasuries yesterday, according to JPMorgan Chase & Co. indexes. Spreads averaged 264 this month, up from 253 in January.
Indonesia plans to sell global bonds twice in 2013, Loto Srianita Ginting, director of government securities at the debt management office, said Dec. 28. The nation hired JPMorgan, Standard Chartered Plc and Deutsche Bank AG earlier this month to help it arrange an offering.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell one basis point to 110 basis points as of 8:49 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge dropped 6.2 basis points since Jan. 31 and 3.4 this year, according to data provider CMA.
The Markit iTraxx Australia index increased 1.75 basis points to 118.75 as of 10:59 a.m. in Sydney, Westpac Banking Corp. prices show. The benchmark is set for its highest close since Feb. 7, paring its decline this month to 0.8 basis point, CMA prices show.
The Markit iTraxx Japan index was little changed at 127 basis points as of 9:09 a.m. in Tokyo, according to Deutsche Bank AG prices. The measure has fallen 8.2 basis points in February, taking its 2013 decline to 32 basis points, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.
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.
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