Companies in Asia Halt Note Sales Ahead of Earnings Results
Companies in Asia eschewed dollar- denominated debt sales ahead of earnings results announcements. Bond risk fell in the region outside of Australia.
No companies from the Asia-Pacific region have offered notes since Aug. 6, when Westpac Banking Corp. (WBC), the Australian lender that ranks among the 20 most-active debt issuers globally this year, sold $1.25 billion of securities, according to data compiled by Bloomberg. China Petrochemical Corp., known as Sinopec Group, and Sound Global Ltd. (SGL) priced $650 million of bonds the same day.
“Dollar issuance has stopped because many companies are waiting to announce their results,” said Annisa Lee, a Hong Kong-based credit analyst at Nomura Holdings Inc. “China’s property companies and state-owned enterprises are expected to come out with dollar or Dim Sum deals soon.”
Rio Tinto Plc (RIO), the world’s second-biggest shipper of iron ore, said today that first-half profit dropped 22 percent after prices for iron ore, copper and aluminum fell and costs gained. PCCW Ltd. (8), the Hong Kong-based phone company controlled by billionaire Richard Li, will release its results Aug. 10. Asian stocks rose for a third day as speculation mounted central banks will take steps to spur growth and better-than-forecast U.S. corporate earnings boosted the outlook for the economy.
Dim Sum bonds are yuan-denominated securities sold in Hong Kong. Australia & New Zealand Banking Group Ltd. (ANZ) began marketing a sale of about 1 billion yuan of the notes today at a yield of around 2.9 percent, according to a person familiar with the matter, who declined to be identified because the details are private.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan decreased 2 basis points to 148.5 as of 1:50 p.m. in Singapore, Royal Bank of Scotland Group Plc prices show. The gauge is set for the lowest close since March 21, according to CMA. A drop signals improving perceptions of creditworthiness, while an increase suggests the opposite.
More than 70 percent of the S&P 500 companies which reported second-quarter results beat estimates, data compiled by Bloomberg show. Optimism also rose as Federal Reserve Bank of Boston President Eric Rosengren told CNBC yesterday the central bank should pursue an “open-ended” easing program of “substantial magnitude” to boost growth and hiring amid the global slowdown.
In Europe, Luxembourg Prime Minister Jean-Claude Juncker said a Greek exit from the euro area would be “manageable.”
The Markit iTraxx Japan index fell 9 basis points to 196 basis points as of 2:36 p.m. in Tokyo, Citigroup Inc. prices show. A basis point is 0.01 percentage point.
The Markit iTraxx Australia index rose 1 basis point to 158.5 basis points as of 10:10 a.m. in Sydney, Westpac prices show. The gauge changed direction yesterday after falling 12.4 basis points over the two previous trading days to 155.9, its lowest since May 3, according to data provider CMA.
Credit-default swap indexes are benchmarks for insuring bonds against default and traders use them to speculate on credit quality. The swap contracts pay the buyer face value in exchange for the underlying securities if a borrower fails to meet its debt agreements.
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