Indonesia, Asia’s fifth-largest economy, is marketing a sale of U.S. dollar-denominated sukuk as issuers from Japan to Korea and Thailand plan offerings.
The Southeast Asian sovereign plans to sell 5.5-year shariah-compliant notes at about 6.375 percent, a person familiar with the matter said, asking not to be identified because the terms aren’t set. Korea Development Bank and Japan’s Fukoku Mutual Life Insurance Co. are also marketing debt, while TMB Bank Pcl, the Thai commercial lender formerly dedicated to military personnel, is considering a sale in the U.S. currency, separate people said.
Two companies sold bonds yesterday, the most offerings from borrowers in Asia outside Japan since Aug. 6, ahead of next week’s Federal Reserve meeting at which policy makers are expected to begin winding back record stimulus, data compiled by Bloomberg show. A gauge of regional bond risk is on track for its lowest close in almost a month, according to credit-default swap traders.
“It’s always been a busy September in past years, and I guess this year won’t differ,” said Raymond Chia, the Singapore-based deputy head of credit research for Asia fixed-income at Schroder Investment Management Ltd., which oversaw about $388 billion as of June 30. “Issuers are capitalizing on a window of opportunity as they are concerned with the interest-rate outlook and tapering.”
PTT Exploration & Production Pcl, the state-controlled Thai oil explorer, raised $500 million yesterday while China ZhengTong Auto Services Holdings Ltd., a luxury car dealer, sold $335 million of bonds, data compiled by Bloomberg show.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan decreased 5 basis points to 135 as of 1:49 p.m. in Hong Kong, Australia & New Zealand Banking Group Ltd. prices show. The benchmark, which has fallen 18 basis points in the three trading days through yesterday, is set to close at its lowest level since Aug. 14, according to data provider CMA.
Yields on Asian dollar debt have climbed 109 basis points to 5.7 percent since May 31, according to JPMorgan Chase & Co. indexes, after Fed Chairman Ben S. Bernanke signaled that the central bank would consider paring stimulus if it saw signs of sustained growth. Monthly bond purchases will probably be reduced to $75 billion from the current $85 billion pace, according to the median estimate of 34 economists surveyed by Bloomberg News last week.
Indonesia may sell as much as $1.5 billion of dollar-denominated Islamic securities as soon as today, the person familiar with the matter said.
Korea Development Bank is meanwhile marketing a sale of 5.5-year bonds at about 155 basis points more than Treasuries, and Fukoku Mutual Life is considering pricing as much as $500 million of perpetual bonds in the high 6 percent area, according to people with knowledge of the offerings.
TMB Bank plans to meet fixed-income investors in Singapore, Hong Kong and London from Sept. 12 to discuss issuing in the U.S. currency, another person said.
The Markit iTraxx Australia index retreated 1 basis point to 112 basis points as of 3:49 p.m. in Sydney, according to National Australia Bank Ltd. The gauge is on course for its lowest close since May 30, 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 slid 2 basis points to 86 as of 2:50 p.m. in Tokyo, Deutsche Bank AG prices show. The measure last closed lower on May 24, according to CMA.
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.