Export-Import Bank of India is marketing dollar-denominated notes as U.S. currency issuance in the nation heads toward its busiest quarter in three.
Mumbai-based Exim Bank is offering 5.5-year bonds at a spread of about 245 basis points more than Treasuries, according to a person familiar with the matter. Three Indian issuers have sold dollar debentures totaling $1.55 billion so far this year, according to data compiled by Bloomberg.
Yield premiums on dollar notes for the nation’s companies narrowed to 344.2 basis points more than Treasuries on March 21, the least since June, HSBC Holdings Plc indexes show. Seven Indian companies sold dollar bonds in the three months to June 2013 totaling $4.05 billion. A sale of more than $200 million by Exim Bank would also make this quarter the busiest in terms of volumes since that period.
“Spreads seem favorable for Indian borrowers at the moment,” said A.S. Thiyaga Rajan, a senior managing director at Aquarius Investment Advisors Pte in Singapore. “There’s a positive disposition toward India on perceptions India has weathered the storm of Fed tapering.”
U.S. currency bond yields for Indian borrowers average 5.28 percent, close to the lowest in nine months, JPMorgan Chase & Co. indexes show. Costs may rise after the Federal Reserve halts bond purchases. The U.S. central bank is expected to announce the stimulus program’s end at its October meeting, according to analysts surveyed by Bloomberg News this month.
State-owned IDBI Bank Ltd. was the last Indian lender to sell dollar securities, raising $300 million via 5 percent 5.5-year notes at a 350 basis-point spread on March 19.
Exim Bank may sell its notes as early as today, the person familiar with the matter said, asking not to be identified because the details are private. The company last sold dollar bonds in January 2013, raising $750 million via 4 percent securities due 2023 and issued at a 220 basis-point spread.
The cost of insuring corporate and sovereign bonds from default in the Asia-Pacific region fell today, according to traders of credit-default swaps.
The Markit iTraxx Asia Series 21 index of 40 investment-grade borrowers outside Japan dropped 1 basis point to 134 basis points as of 8:33 a.m. in Singapore, according to Standard Chartered Plc prices.
Series 21 of the measure began trading on March 20. Series 20 ended last week at 124.5 basis points, according to prices from data provider CMA.
The Markit iTraxx Australia Series 21 index fell 0.5 of a basis point to 103.5 as of 11:25 a.m. in Sydney, according to Westpac Banking Corp. Series 20 closed last week at 102.2, 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 Series 21 fell 0.5 of a basis point to 88.5 as of 9:33 a.m. in Tokyo, Citigroup Inc. prices show. Markets in Japan were closed March 21 for a 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.