Asian borrowers sold the most dollar-denominated bonds since January this week as U.S. demand for the region’s sovereign debt boosted issuance.
Pakistan led $7.5 billion of offerings, 17 percent more than last week and the most since the five days ended Jan. 10, according to data compiled by Bloomberg. The South Asian nation raised $2 billion on April 8 from its largest-ever sale, one day after Sri Lanka issued $500 million of 2019 notes. U.S. investors bought about 60 percent of Pakistan’s debt and 46 percent of Sri Lanka’s, people familiar said. Tencent Holdings Ltd., Asia’s biggest Internet company, plans to meet investors in the U.S. from April 14, a separate person said today.
“U.S. demand, if you can garner it, is order book changing,” said Alex von Sponeck, who worked on Pakistan’s offering as head of debt origination for Central and Eastern Europe, the Middle East and Africa at Bank of America Corp.’s Merrill Lynch unit. “The U.S. funds are larger, the liquidity is more pent up and the average order size is always bigger.”
U.S. investors bought about 35 percent of Pakistan’s last sale in 2007, he said in a phone interview yesterday.
Many Asian issuers have shunned the U.S. market this year, with more than half of offerings restricted to investors outside the country, according to data compiled by Bloomberg. Lack of supply has heightened demand with Pakistan, which initially planned to sell between $500 million and $1 billion of five-year bonds, adding a 10-year tranche and increasing its target in response to investor feedback, Von Sponeck said.
Sovereign bonds are returning more than corporate debt in Asia this year, JPMorgan Chase & Co. indexes show. Debt sold by the region’s governments gained 5 percent since Dec. 31, compared with 3 percent for company notes in the U.S. currency.
Sri Lanka, Indonesia and the Philippines all issued in the second week of January in Asia excluding Japan, raising a total of $6.5 billion, Bloomberg-compiled data show.
Tencent plans to meet investors in New York on April 14, Boston on April 15 and Los Angeles on April 16, the person with knowledge of the matter said, asking not to be identified because the details are private. Korea Resources Corp. has scheduled meetings in Asia and the U.S. from April 16, another person said.
The cost of insuring Asia-Pacific corporate and sovereign bonds from default rose today, according to traders of credit-default swaps.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan added 2 basis points to 120.5 basis points as of 8:30 a.m. in Hong Kong, Australia & New Zealand Banking Group Ltd. prices show. The gauge is poised to rise for the first time since April 3 after its longest streak of decreases since the period ending Feb. 11, according to data provider CMA.
The Markit iTraxx Australia index rose 2 basis points to 98.5 as of 10:06 a.m. in Sydney, according to ANZ. The benchmark is on course for its biggest one-day gain since March 31, 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 advanced 1.5 basis points to 87 basis points as of 9:23 a.m. in Tokyo, Citigroup Inc. prices show. The measure is on track for its highest close since March 25, 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: Rachel Evans in Hong Kong at email@example.com
To contact the editors responsible for this story: Katrina Nicholas at firstname.lastname@example.org Chris Bourke