The cost of insuring corporate and sovereign bonds in Asia against non-payment surged as a levy on Cyprus bank deposits spurred renewed turmoil in Europe. PT Tower Bersama Infrastructure Tbk hired banks for a possible dollar-denominated offering.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan jumped six basis points to 107 basis points as of 2:31 p.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge is set for its biggest one-day increase since Sept. 20, according to data provider CMA. Taiwan Semiconductor Manufacturing Co. also hired lenders to arrange meetings to discuss a possible bond in the U.S. currency.
Euro finance ministers reached an unprecedented agreement on March 16 forcing depositors in Cypriot banks to share in the cost of the latest euro-zone bailout. While Cyprus accounts for less than half a percent of the 17-nation euro economy, the concern is that the one-time tax on accounts could trigger bank runs across Europe and further destabilize the financial system.
“More contagion fears will spread through investors and it will encourage depositors in the European periphery to move their funds to a safer place -- either under the pillow or to Germany,” Mark Bayley, a Sydney-based credit strategist with advisory company Aquasia Ltd., said. “This is essentially a bail-in of depositors, and sets a dangerous precedent.”
Tower Bersama has picked seven banks to arrange fixed-income investor meetings in Los Angeles, Boston, New York, Singapore, Hong Kong and London from tomorrow, according to a person familiar with the matter, who asked not to be identified because the terms aren’t set.
Taiwan Semiconductor has hired Goldman Sachs Group Inc. to arrange meetings in the U.S., Asia and Europe from today about a possible senior note in dollars, a separate person said. Zhong An Real Estate Ltd. selected BNP Paribas SA, JPMorgan Chase & Co. and UBS AG to set up a series of investor meetings in Hong Kong and Singapore to start tomorrow, according to a another person with knowledge of the details.
Bank of America Corp. has hired two syndicate bankers from Credit Suisse Group AG in Asia, according to an internal memo confirmed by Mark Tsang, a spokesman at the U.S. lender. Devesh Ashra joins as head of Asia debt capital markets syndicate, while Hital Desai moves to the bond syndicate team.
The bank has appointed Ashish Malhotra as head of Asia DCM, Ranobir Mukherji as vice chairman of Asia DCM and Siong Ooi as head of Asia-Pacific leveraged finance and loans.
The Markit iTraxx Australia index rose five basis points to 107.5 basis points as of 3:44 p.m. in Sydney, according to National Australia Bank Ltd. prices. The gauge is poised for its largest daily gain since Feb. 25, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market. The Markit iTraxx Japan index climbed seven to 110.5 as of 3:31 p.m. in Tokyo, according to Deutsche Bank AG prices.
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.