Asian Dollar Bond Sales Pause for Longest Stretch Since February

Asian companies paused sales of dollar-denominated bonds as markets in Hong Kong and China shut for a public holiday. Debt risk in the region rose.

Issuers from Asia outside of Japan last sold U.S. currency notes on March 27, the longest period without offerings since Lunar New Year celebrations halted issuance in February, according to data compiled by Bloomberg. Sharjah Islamic Bank (NBS) and a unit of Yingde Gases (2168) Group Co. are meeting investors this week about potential deals, while Korea’s Daegu Bank Ltd. is planning talks, according to people familiar with the arrangements. Offerings in the region quadrupled to $17.8 billion in March from $4.3 billion in February, the data show.

“This has been a really quiet week due to the holidays in China and Hong Kong,” said Gene Cheon, head of Asia credit research at Deutsche Bank AG. “Activity will pick up in the next few weeks.”

Average bond yields for Asian borrowers in dollars rose to 3.6 percent yesterday, the highest in more than two weeks, according to HSBC Holdings Plc indexes. Markets in China and Hong Kong are closed today to celebrate the Ching Ming Festival.

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan rose 2 basis points to 122 as of 8:28 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The benchmark has ranged from 100.5 to 122.3 since Dec. 31, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.

Bond Risk

The Markit iTraxx Japan index increased 1.5 basis points to 111 as of 9:28 a.m. in Tokyo, according to Deutsche Bank prices. The gauge fell 46 basis points in the three months ended March 31, its second consecutive quarter of declines, CMA data show.

The Markit iTraxx Australia index climbed 1.5 basis points to 120 as of 10:45 a.m. in Sydney, Westpac Banking Corp. prices show. The measure has ranged from 102.3 basis points to 127.5 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.

To contact the reporter on this story: Tanya Angerer in Singapore at tangerer@bloomberg.net

To contact the editor responsible for this story: Katrina Nicholas at knicholas2@bloomberg.net

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