Mizuho Corporate Bank Ltd. is marketing U.S. dollar-denominated bonds as a gauge of corporate debt risk in Japan heads for its lowest close since March 2011.
Mizuho, a unit of the Asian nation’s third-biggest bank by market value, is offering five-year notes at about 105 basis points more than Treasuries and 10-year securities at a spread of about 155 basis points, a person familiar with the matter said. Bank of India is also in the market with 5.5-year debt at a premium of about 285 basis points, said another person.
Dollar bond sales from Japanese issuers surged to $13.4 billion this quarter, almost double the prior three months, data compiled by Bloomberg show. Marubeni Corp., Japan’s biggest trader of agricultural commodities, and Sompo Japan Insurance Inc. are also planning offerings. Japan’s benchmark index of credit-default swaps is set for its lowest close since the day of the 2011 earthquake and tsunami that devastated north-eastern parts of the nation.
“The timing availability is limited for Japanese issuers to sell bonds,” Tokyo-based Reiko Hayashi, the head of Japan debt capital markets at Bank of America Merrill Lynch said. Companies are seizing on a window between earnings season and the end of the fiscal year, she said.
The Markit iTraxx Japan index declined 1 basis point to 101 basis points as of 9:10 a.m. in Tokyo, Citigroup Inc. prices show.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan was little changed at 102.5 basis points as of 8:24 a.m. in Hong Kong, according to Royal Bank of Scotland Group Plc prices. The measure rose for the past three business days, the longest stretch since January, according to data provider CMA.
The Markit iTraxx Australia index was also little changed at 105 basis points as of 11:12 a.m. in Sydney, according to National Australia Bank Ltd. The gauge has fallen 9.3 basis points so far in March, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private 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.