Cnooc Ltd. led $9.7 billion of dollar-denominated debt sales this week, the busiest period for Asian issues since January, as Chinese companies from State Grid Corp. to Lenovo Group Ltd. consider bonds.
China’s biggest offshore energy explorer raised $4 billion from a sale of three-, 10- and 30-year securities on April 23, data compiled by Bloomberg show. Issuers from the Philippines, India and South Korea helped boost volumes outside Japan to the highest since the week ended Jan. 10, the data show.
Borrowers from the region paused offerings today after issuance more than double last week’s $3.4 billion created “indigestion” in the secondary market, according to Annisa Lee, a Hong Kong-based credit analyst at Nomura Holdings Inc. State Grid finishes meetings with bond investors in Asia and the U.S. today, a person with knowledge of the details said. Beijing-based Lenovo is also considering a dollar sale, a separate person said earlier this week.
“There’s still quite a number of deals coming up, mostly high grade, and China is probably still the focus,” said Lee by phone from Hong Kong. “Next week is a short week so people may not want to rush it. It’s probably more for repeat issuers rather than first timers.”
China breaks for national holidays May 1-2, while Hong Kong, Singapore and Korea are off May 1.
Chinese issuers sold 73 percent of bonds this week, with Tencent Holdings Ltd., Asia’s largest Internet company, raising $2.5 billion, Sinochem Hong Kong Group Co. $500 million and Times Property Holdings Ltd., a developer based in the southern Chinese city of Guangzhou, selling an extra $80 million of bonds first offered last month.
The builder sold 93 percent of the additional 2019 bonds to Asian investors, a person familiar with the matter said today. Fund managers bought 78 percent, the person said, asking not to be identified because the details are private.
The cost of insuring Asian corporate and sovereign bonds from default rose this week, according to traders of credit-default swaps.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan added 1 basis point today to 126 basis points as of 8:41 a.m. in Singapore, Australia & New Zealand Banking Group Ltd. prices show. The gauge is on track to rise to its highest level since March 28 and to gain 1.4 basis points this week, according to data provider CMA.
The Markit iTraxx Japan index was little changed at 84.25 basis points as of 9:41 a.m. in Tokyo, Citigroup Inc. prices show. The measure is poised to advance 0.25 basis point this week, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
Australia’s financial markets are shut for a holiday today.
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.