SK Broadband Co., a Seoul-based Internet service provider, is marketing U.S. dollar-denominated bonds after yield premiums on notes in the currency in Asia fell to a one-month low.
The telecommunications company is offering five-year securities to yield about 200 basis points more than Treasuries, according to a person familiar with the matter who asked not to be identified because the terms aren’t set. Spreads on dollar securities in the region dropped to 286 basis points more than Treasuries on Oct. 18, the lowest since Sept. 20, according to JPMorgan Chase & Co. indexes.
Vingroup Joint Stock Co., Vietnam’s largest shopping mall owner, and Anton Oilfield Services Group are also considering dollar bonds. The planned offerings come amid expectations for the U.S. central bank to only start reducing bond purchases in March, according to a Bloomberg News survey of economists. Corporate bonds worldwide have gained 0.98 percent this month, erasing a loss that reached 2.5 percent in June, the Bank of America Merrill Lynch Global Corporate & High Yield Index shows.
“Risk appetite has returned but the market is still cautious,” said Edwin Chan, Hong Kong-based head of Asian credit research at UBS AG. “Issuers are waiting on the sidelines for the right opportunity, while investors exercise discipline and are not just indiscriminately buying.”
Vingroup and Anton Oilfield will arrange investor meetings from this week, according to people familiar with the matters.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan was little changed at 132.5 basis points as of 8:31 a.m. in Singapore, Westpac Banking Corp. prices show. The measure is on track for a 23.9 basis-point fall this month, the most since June 2012, CMA data show.
The Markit iTraxx Japan index decreased 1.5 basis points to 84 basis points as of 9:07 a.m. in Tokyo, according to Citigroup Inc. prices. The gauge is on track for its lowest level since Sept. 19, according to data provider CMA.
The Markit iTraxx Australia index fell 1 basis point to 105 as of 11:00 a.m. in Sydney, National Australia Bank Ltd. prices show. The benchmark, which has ranged from 96.1 to 149.5 this year, is poised to drop 20.2 basis points this month, 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.