Oil & Natural Gas Corp., India’s biggest state-run explorer, is planning a sale of dollar-denominated bonds as falling borrowing costs spur Asian energy companies to issue U.S. currency debt.
ONGC hired three banks to help arrange fixed-income investor meetings in Asia and Europe from tomorrow and a deal may follow, a person familiar with the matter said, asking not to be identified because the details are private. China Petroleum & Chemical Corp., or Sinopec, and China National Petroleum Corp. are among energy companies in Asia outside Japan that have raised $6.3 billion from bond sales in April, up from $1.2 billion last month, Bloomberg-compiled data show.
Average interest rates for oil and gas firms in the region slid 15 basis points this month to 4.34 percent, dropping for the past three weeks in the longest retreat in six months, JPMorgan Chase & Co. indexes show. That’s below the 4.71 percent for all corporate issuers, the data show. Borrowers may benefit as U.S. Treasury yields drop toward their lowest levels this year, according to Standard Chartered Plc.
“It’s a good time for ONGC or other investment-grade companies to be tapping the markets at low yields,” said Shankar Narayanaswamy, the Singapore-based global head of credit strategy at Standard Chartered.
ONGC, which plans to sell its securities through unit ONGC Videsh Ltd., hired Citigroup Inc., Deutsche Bank AG and Royal Bank of Scotland Group Plc to manage the possible Reg S note issue, the person familiar with the matter said. Standard & Poor’s assigned a BBB- rating to the company’s potential notes, the lowest investment grade ranking, according to an e-mailed statement today.
The cost of insuring corporate and sovereign bonds from non-payment decreased in the Asia-Pacific region outside Japan, according to credit-default swap traders.
The Markit iTraxx Australia index slid 0.5 basis point to 113 basis points as of 10:25 a.m. in Sydney, according to Deutsche Bank AG. The gauge is on course for its lowest close since April 12, according to data provider CMA.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan declined 1 basis point to 112.5 as of 8:42 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The benchmark has fallen 9.8 basis points this month, according to RBS and CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.
The Markit iTraxx Japan index rose 0.5 of a basis point to 92 basis points as of 9:25 a.m. in Tokyo, Deutsche Bank prices show. The measure has fallen 21 basis points this month, according to Deutsche Bank and CMA 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.