Korea Gas Corp. is marketing a U.S. dollar-denominated bond after borrowing costs for South Korean issuers dropped to an eight-month low.
The world’s largest commercial buyer of liquefied natural gas is offering 10-year notes at a yield of about 145 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. Yields for Korean borrowers were at 2.91 percent on Feb. 5, compared with 2.90 percent the day before, the lowest since June 4, JPMorgan Chase & Co. indexes show.
Only South Korean issuers have come to the market in the U.S. currency this week in Asia outside Japan, taking advantage of 10-year Treasuries trading at an average yield of 2.64 percent this month, the least since October. Korea Midland Power Co., a unit of Korea Electric Power Corp., sold $300 million of notes yesterday, Bloomberg-compiled data show.
“To some extent Korean credits are considered a safe haven among Asian counterparts at the minute,” said Annisa Lee, a Hong Kong-based credit analyst at Nomura Holdings Inc., Japan’s largest brokerage. “Sentiment recently has been less positive on Chinese credits.”
Companies from Greater China, including Hong Kong, made up close to 40 percent of dollar issuance in Asia excluding Japan this year, after selling about 54 percent of bonds last year.
Hyundai Capital America, a unit of South Korea’s Hyundai Motor Co., priced $1.5 billion of notes in a two-part sale on Feb. 3.
Yields on the $400 million of March 2018 securities for Chinese real estate developer Glorious Property Holdings Ltd. surged to a more than three-month high of 19.5 percent, Bloomberg prices show, after the chief executive officer and the chief financial officer resigned yesterday.
Markets in mainland China remain closed for holidays and will reopen tomorrow.
The cost of insuring corporate and sovereign bonds in the Asia-Pacific region from non-payment fell, according to traders of credit-default swaps.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan decreased 1 basis point to 149 basis points as of 8:28 a.m. in Hong Kong, Australia & New Zealand Banking Group Ltd. prices show. The gauge is on track for its lowest close since Jan. 29, according to prices from data provider CMA.
The Markit iTraxx Australia index slid 1.3 basis points to 107.3 basis points as of 11:18 a.m. in Sydney, according to ANZ. The measure is set for its third consecutive day of declines, putting it on track for its longest downward streak since the period ending Dec. 24, and its lowest close since Jan. 31, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
The Markit iTraxx Japan index declined 1 basis point to 85.3 basis points as of 9:18 a.m. in Tokyo, Citigroup Inc. prices show. The benchmark is poised for its lowest close since Feb. 3.
Credit-default swap indexes are benchmarks for protecting 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.