South Korea’s government, Kookmin Bank and Korea National Oil Corp. are planning U.S. dollar-denominated bonds after offerings from the country dipped to the lowest this year.
Asia’s fourth-biggest economy is considering tapping offshore markets after meeting with investors in Europe and the U.S. this month, a person familiar with the matter said. Dollar issuance from the country’s borrowers fell to $200 million in May, the least since December when there were no sales, according to data compiled by Bloomberg.
Aside from Kookmin, South Korea’s largest bank by assets, and state-run KNOC, Korea Exchange Bank also met fixed-income investors this month, people familiar said. Yields on dollar notes for the country’s borrowers are at a one-year low of 2.59 percent, JPMorgan Chase & Co. indexes show. Bond sales in Asia outside Japan fell 67 percent to $11.95 billion in May, after a record month in April.
“With a number of Korean issuers waiting in the wings for the country’s mooted sovereign bond, U.S. dollar bond supply has predictably declined from April’s unprecedented run rate,” said Mark Reade, a Hong Kong-based analyst at Mizuho Securities Asia Ltd. Given the surge the previous month, issuance from the region in May “is respectable, and shows continued strong demand for Asian dollar corporate bonds.”
Kookmin Bank hired Bank of America Corp., Barclays Plc, BNP Paribas SA, Citigroup Inc. and Standard Chartered Plc to help arrange a 144A/Reg S offering, a person familiar with the matter said May 27. KNOC also hired sale managers and may issue notes in dollars or euros, a separate person said this week.
China Merchants Bank Co. is also considering a security in the U.S. currency after investor meetings started June 3, another person said. Kaisa Group Holdings Ltd. sold $400 million of five-year debentures yesterday with a 9 percent coupon.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan dropped 1 basis point to 109 basis points as of 10:31 a.m. in Hong Kong, according to Standard Chartered prices. The gauge is poised for a monthly decline of 17.7 basis points, the biggest drop since February. It last closed lower in May 2013, according to data provider CMA.
The Markit iTraxx Japan index declined 0.5 of a basis point to 77.75 as of 9:18 a.m. in Tokyo, Citigroup prices show.
That level would be the lowest close since March 12 for a monthly decline of 8.25 basis points, the biggest fall since December, following two consecutive months of rises, CMA data show.
The Markit iTraxx Australia index was little changed at 86.5 basis points as of 10:29 a.m. in Sydney, Australia & New Zealand Banking Group Ltd. prices show. The benchmark is near a four-year low of 86.4 basis points touched yesterday and poised for a 12.5 basis-point drop since April 30, the sharpest decline since October, CMA data show.