Export-Import Bank of India raised $500 million, selling its first U.S. dollar-denominated bonds in more than a year, as Korea Finance Corp. and Australia & New Zealand Banking Group Ltd. market debt sales in the currency.
Exim Bank sold five-year securities to yield 355 basis points more than Treasuries, a person familiar with the matter said, asking not to be named because the matter is private. Korea Finance is seeking to pay a 190 basis-point spread on similar-maturity notes, while Melbourne-based ANZ is marketing 10-year subordinated debt at a 315 basis-point premium, people with knowledge of each sale said.
Perceptions of Asian corporate creditworthiness improved today on speculation the world’s biggest central banks will act to boost global growth, bolstering the outlook for the region’s exporters. Exim Bank’s offering follows State Bank of India’s $1.25 billion debt sale last week, which revived the dollar bond market for the nation’s borrowers after a five-month hiatus.
“State Bank of India’s bond has opened a window for other Indian banks,” William Mak, a credit analyst at Nomura Holdings Inc., said by phone from Hong Kong today. “The broader market has rallied and spreads have tightened so there’s now an opportunity. Further issuance is possible later this week.”
The cost of insuring Asian corporate and sovereign debt from non-payment declined, with the Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan dropping 2 basis points to 157.5 basis points as of 1 p.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show.
David Rasquinha, a Mumbai-based executive director at India’s Exim Bank, was traveling and wasn’t immediately available to comment on the sale. Kim Heung Sang, the head of the global funding team at Korea Finance’s global finance department, couldn’t immediately be reached for comment.
State Bank of India priced its five-year securities to yield 4.125 percent, or 375 basis points more than similar-maturity Treasuries, according to data compiled by Bloomberg.
The average yield that investors demand to hold dollar notes sold by Indian companies instead of Treasuries fell 31 basis points this month to 486, according to an index compiled by HSBC Holdings Plc.
Mumbai-based Exim Bank last sold dollar bonds in March 2011, according to data compiled by Bloomberg. The floating-rate notes due in March 2016 were priced to yield 215 basis points more than the London interbank offered rate, the data show.
In the U.S., the Federal Open Market Committee will announce a policy decision tomorrow, and the European Central Bank will convene the following day. U.S. Treasury Secretary Timothy F. Geithner and German Finance Minister Wolfgang Schaeuble backed a commitment by European leaders to do everything needed to defend the euro area while failing to mention its weakest link, Greece.
Europe’s fiscal crisis is damping growth in Asian exporting nations, with data today showing Taiwan’s economy unexpectedly shrank in the second quarter from a year earlier. South Korean output fell and a Japanese manufacturing gauge reached the lowest level since the wake of the 2011 earthquake, according to separate data released today.
Shui On Land
Shui On Land Ltd. sold $400 million of 9.75 percent bonds due in February 2015 yesterday, data compiled by Bloomberg data show. The Chinese property developer’s offering received about $2.5 billion of bids from more than 150 investors, according to a person familiar with the deal.
Investors in Asia bought 87 percent of the securities with European buyers accounting for the rest, the person said. Private banks took the biggest share of Shui On Land’s notes, buying 60 percent of the bonds, the person said. Fund managers took 27 percent.
The Markit iTraxx Australia index ended the day little changed at 167, according to Markit Group Ltd. The Markit iTraxx Japan index fell 0.5 of a basis point to 181.5 basis points as of 5:26 p.m. in Tokyo, Citigroup Inc. prices show.
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. A basis point is 0.01 percentage point.
— With assistance by Henry Sanderson, Tanya Angerer, and Rachel Evans