China ZhengTong Auto Services Holdings Ltd. (1728), the luxury car dealer that canceled a planned bond offering last year, is marketing a sale of U.S. dollar-denominated notes. Debt risk in the region fell.
China ZhengTong, which sells automobiles such as Tata Motors Ltd. (TTMT)’s Land Rover, plans to offer securities due June 2018 at a spread of about 300 basis points more than five-year Treasuries, a person familiar with the matter said, asking not to be identified because the terms aren’t set. PTT Exploration & Production Pcl (PTTEP) is also offering debentures in the U.S. currency, a separate person said.
The cost of insuring Asian corporate and sovereign bonds from non-payment declined today, with a gauge of regional risk on track for its lowest close in more than three weeks, according to traders of credit-default swaps. Offerings have also picked up before the Federal Reserve’s meeting Sept. 17-18, at which it will probably begin paring stimulus, according to economists surveyed by Bloomberg.
“This week looks like it will be very busy,” said Louisa Lam, a Hong Kong-based credit analyst at HSBC Holdings Plc. “Issuers want to come before tapering and many companies had their results in August so they can now provide investors with their latest financials.”
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 3 basis points to 143 basis points as of 8:20 a.m. in Hong Kong, Australia & New Zealand Banking Group Ltd. (ANZ) prices show. The measure is on course for its lowest close since Aug. 16, according to data provider CMA.
The Fed will trim its monthly bond purchases to $75 billion from the current $85 billion pace at its meeting next week, according to the median estimate of 34 economists.
Moody’s Investors Service expects to rate China ZhengTong’s bonds A1, eight levels higher than on the sale scrapped in May last year and in line with the credit rating of Bank of China Ltd., which is providing a stand-by letter of credit.
PTT Exploration plans to sell as much as $500 million of five-year bonds at about 215 basis points more than similar-maturity Treasuries, a person with knowledge of that sale said.
Japan’s Sumitomo Mitsui Trust Bank Ltd. is marketing five-year dollar bonds and three-year floating-rate notes, a person familiar with the matter said. It is considering pricing the five-year debt at about 137.5 basis points more than Treasuries, and three-year notes at about 95 basis points more than the three-month London interbank offered rate, the person said.
The Markit iTraxx Japan index fell 1.5 to 88 basis points as of 9:21 a.m. in Tokyo, Citigroup Inc. prices show. The gauge, which has ranged from 74 to 148.1 this year, is on track for its lowest close since May 24, according to CMA.
The Markit iTraxx Australia index decreased 2 basis points to 116 as of 10:23 a.m. in Sydney, according to National Australia Bank Ltd. The benchmark is set for its lowest close since Aug. 14, 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.
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