State Grid Corp. of China, the nation’s largest power distributor, is considering a dollar-denominated bond offering following sales from other government-backed giants.
The company will meet investors in the U.S. and Asia from April 21, according to a person familiar with the matter, who asked not to be identified because the details are private. China Petrochemical Corp., known as Sinopec Group and parent of Asia’s largest oil refiner, raised $5 billion selling securities April 2 in Asia’s biggest dollar bond offering in a decade.
The sales come as China’s President Xi Jinping works to reduce the role of the state in the economy and reform some of the nation’s government-owned companies, known as national champions. State Grid has plans for “mixed-ownership reform” which will open some of its businesses to private investment, the Economic Information Daily reported this month. China Petroleum & Chemical Corp., part of Sinopec Group, plans to sell as much as 30 percent of its oil retail business.
“State-owned enterprise reform including stake sales will lead to more pricing differentiation over time,” Krishna Hegde, Barclays Plc’s Singapore-based head of Asia credit research said. “The view the market used to have is that any state-owned enterprise will be equally state-supported but that’s slowly changing.”
Poly Real Estate
Chinese developer Poly Real Estate Group Co. is offering five-year debentures at about 390 basis points more than Treasuries, another person familiar with that matter said.
Banglalink Digital Communications Ltd., a Bangladeshi mobile telecommunications company, is considering selling $300 million of similar-maturity debt at about 9 percent.
The cost of insuring corporate and sovereign bonds in Asia fell today. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan declined 3 basis points to 120 basis points as of 10:22 a.m. in Singapore, prices from Royal Bank of Scotland Group Plc show. The gauge is poised for its biggest one-day drop since March 31, according to data provider CMA.
The Markit iTraxx Australia index advanced 1 basis point to 99.5 as of 12:52 p.m. in Sydney, according to Westpac Banking Corp. The benchmark is on track for a second day of gains and its highest level since April 11, 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 retreated 0.5 of a basis point to 85.8 as of 12:36 p.m. in Tokyo, Citigroup Inc. prices show. The measure is on track for its first decline in four days, 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.