Oil & Natural Gas Corp. is marketing U.S. dollar-denominated bonds and PTT Exploration & Production Pcl plans a sale in the currency as issuance in April capped the busiest two-month period on record.
ONGC, as India’s biggest state-run explorer is known, is offering five-year notes at a spread of about 200 basis points and 10-year securities at about 230 basis points, a person familiar with the matter said, asking not to be identified because the terms aren’t set. PTTEP Chief Executive Officer Tevin Vongvanich said Thailand’s largest crude oil and natural gas producer may sell as much as $1 billion of notes this year to fund expansion and repay debt.
Dollar bond sales in Asia outside Japan total $35.4 billion since Feb. 28, the most for any two-month period in data compiled by Bloomberg stretching back to 1999. The Indonesian sovereign, China Petroleum & Chemical Corp. and 1Malaysia Development Bhd., the state investment company also known as 1MDB, led issuance, raising a combined $9.5 billion, the data show. Corporate notes in the region yielded an average 4.69 percent on April 26 from 4.58 percent at the start of the year, JPMorgan Chase & Co. indexes show.
“Quantitative easing from major central banks has supported demand for higher yields,” said Brayan Lai, a Singapore-based analyst in emerging-market credit trading at Jefferies Group LLC. “Weaker or little-changed economic data out of U.S. and China, and geopolitical risks in Europe and North Korea, are also keeping bonds bid.”
U.S. data due today is forecast to show consumer spending stagnated last month, boosting bets the Federal Reserve will renew its commitment to its bond-buying program at a meeting this week. Growth in Chinese industrial companies’ profits slowed in March, the National Bureau of Statistics said on its website April 27, adding to evidence that nation’s economic recovery may be losing steam.
ONGC, which is selling its debt via unit ONGC Videsh Ltd., hired Citigroup Inc., Deutsche Bank AG and Royal Bank of Scotland Group Plc to help arrange the sale, the person familiar with the matter said. The securities are expected to be rated Baa2 by Moody’s Investors Service and BBB- by Standard & Poor’s.
ONGC last sold dollar bonds in 1986, Bloomberg-compiled data show. The company received a bridge loan of $870 million to help fund the acquisition of stake in an oil field and pipeline in Azerbaijan, the data show. Proceeds of a bond sale would be used to refinance the bridge facility, Managing Director D.K. Sarraf said in a March 4 phone interview.
The cost of insuring corporate and sovereign bonds in Asia excluding Japan was little changed today, according to traders of credit-default swaps. The Markit iTraxx Asia index of 40 investment-grade borrowers was at 111.5 basis points as of 8:32 a.m. in Hong Kong, Royal Bank of Scotland prices show. The gauge has ranged from 100.5 to 122.3 since Dec. 31, according to data provider CMA.
The Markit iTraxx Australia index fell 1 basis point to 110 as of 10:43 a.m. in Sydney, according to Westpac Banking Corp. prices. The benchmark is headed for a 13 basis-point drop this month and has declined 17.5 basis points this year according to Westpac and CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.
Markets in Japan are closed today for a public holiday.
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.