Nomura Holdings Inc. is marketing a sale of U.S. dollar-denominated notes as corporate bond risk in Japan falls to the lowest level in two years.
The nation’s biggest brokerage plans to sell 3 1/2-year securities as soon as today, a person familiar with the matter said, asking not to be named as the terms aren’t set. The cost of insuring company notes in Japan against default is headed for the lowest close since March 2011, according to credit-default swap traders.
Nomura will be the ninth Japanese company to issue bonds in the U.S. currency this year after Bank of Tokyo-Mitsubishi UFJ Ltd. and Nippon Telegraph & Telephone Corp. sold notes last month, data compiled by Bloomberg show. Companies from the East Asian country pay an average 1.95 percent to sell dollar debt, 8 basis points less than a month ago and 85 basis points less than in March last year, Bank of America Merrill Lynch indexes show.
Japanese banks and leasing companies “have been diversifying their businesses into the international markets,” said Mutsuo Suzuki, an analyst at Moody’s Investors Service in Tokyo. “In terms of composition of balance sheet, the asset side is increasingly being characterized by U.S. dollar or other foreign currency-denominated assets so they need to match assets with the foreign currency-denominated liabilities.”
The Markit iTraxx Japan index, which is poised to decrease 45.5 basis points this year, fell 2.75 basis points to 113.5 as of 4:16 p.m. in Tokyo, Citigroup Inc. prices show.
Marubeni Corp., Japan’s biggest trader of agricultural commodities, is meeting investors this week to discuss a possible sale of dollar bonds, its first since 2006, according to a person familiar with the matter.
Petron Corp., the Philippines’ largest oil company, also plans to sell more of the U.S. dollar perpetual bonds it issued last month and is marketing the debt at about 104 cents to 104.25 cents on the dollar, a separate person said.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan decreased 3 basis points to 104 basis points as of 3:20 p.m. in Hong Kong, Australia & New Zealand Banking Group Ltd. prices show. The benchmark is set for its lowest close since Jan. 9, according to data provider CMA.
The Markit iTraxx Australia index also dropped 3 basis points to 112 as of 11:37 a.m. in Sydney, according to Westpac Banking Corp. The gauge is on course for its lowest close since Feb. 22, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated 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.
The swap contracts pay the buyer face value in exchange for the underlying securities if a borrower fails to meet its debt agreements.