Zoomlion Heavy Industry Science & Technology Co. is marketing a dollar-denominated bond as debt risk in Asia falls for a third consecutive day.
Zoomlion H.K. SPV Co., a unit of the Chinese concrete and hoisting machinery maker, plans to sell a 10-year note at about 6.25 percent as soon as today, according to a person familiar with the matter. The company has asked existing bondholders to let it amend the terms of its 6.875 percent debt due April 2017 to allow it to borrow more, with responses due by 11 p.m. tomorrow in New York, it said in a statement to the Singapore stock exchange on Dec. 3.
The company, which is based in Changsha in the south-central province of Hunan, would be the first Asian issuer to sell dollar debt in almost a week as issuance slumps ahead of year-end holidays across the region. Bond risk in Asia is meanwhile on track for its longest streak of declines since the period ending Dec. 3, according to Credit Agricole SA and data provider CMA.
“There’s still abundant cash to be put to work and, off the back of that, these deals continue to come,” said Brayan Lai, a desk analyst in emerging-market credit trading at Jefferies Group Inc. in Singapore. “The pace has however slowed tremendously. We’re not expecting a lot more to print in December.”
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan decreased 2 basis points to 111 as of 8:46 a.m. in Hong Kong, Credit Agricole SA prices show. The gauge is set for its lowest close since Dec. 3, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
Proceeds from Zoomlion’s new sale will be used to fund overseas expansion, the person familiar with the matter said, asking not to be identified because the details are private. Holders of Zoomlion’s outstanding bonds will receive $2 for every $1,000 of principal held if they consent to amend the terms by the deadline, according to the exchange statement.
The cost of insuring Australian corporate bonds from default is on course for its lowest close since August 2011, according to traders of credit-default swaps and CMA.
The Markit iTraxx Australia index slid 3 basis points to 124 basis points as of 11:19 a.m. in Sydney, according to prices from Australia & New Zealand Banking Group Ltd. A close of 124 would be the least since the index fell to 122.4 on Aug. 2 last year, CMA prices show.
The Markit iTraxx Japan index declined 2 basis points to 170 as of 9:21 a.m. in Tokyo, Deutsche Bank AG prices show. The index, which has ranged from 165 to 229.5 this half, is on track for its lowest close since Dec. 10, 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.