Asia-Pacific sales of dollar-denominated bonds slowed to the least in a month this week as issuers paused for national holidays in the U.S. and Japan. Bond risk in the region fell.
Baidu Inc., the owner of China’s most popular search engine, led $1.8 billion of debt sales, 54 percent less than last week and the least since the five-day period ending Oct. 26, according to data compiled by Bloomberg. U.S. markets closed for Thanksgiving yesterday while Japan shuts today.
“It’s the Thanksgiving effect,” said Mark Reade, a credit desk analyst at Credit Agricole SA in Hong Kong. “That, combined with the year-end effect, which I think will see issuance progressively slow then ultimately stop as we approach mid-to-late December.”
Asian companies face paying more to sell dollar debt after average yield premiums climbed 23 basis points to 269.9 basis points from a 2 1/2-year low reached Oct. 19, according to HSBC Holdings Plc indexes. Global A&T Electronics Ltd. postponed a planned bond sale this week, with three people familiar with the matter citing market conditions for the delay.
The cost of insuring corporate and sovereign bonds from non-payment in the Asia-Pacific region is on track for its first weekly decline since the period ending Nov. 2, according to traders of credit-default swaps and data provider CMA.
The Markit iTraxx Australia index fell two basis points to 134 basis points as of 11:13 a.m. in Sydney, according to Westpac Banking Corp. prices. The benchmark is set for its lowest close in more than a month, according to CMA which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan decreased one basis point to 114.5 as of 8:18 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge is poised for its lowest close since Oct. 18, CMA prices show.
Credit-default swap indexes are benchmarks for protecting 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.
-- With assistance from Tanya Angerer in Singapore. Editors: Sarah McDonald, Shelley Smith