Power Grid Plans Debut Dollar Bonds After Busiest Day in a Month
Power Grid Corp. of India, Hong Kong Broadband Network Ltd. and Champion REIT (2778) are meeting fixed- income investors after the busiest day of issuance for U.S. dollar-denominated bonds in Asia in more than a month. Debt risk fell to the least in two years.
Power Grid, India’s largest electricity-generation company by market value, hired banks to arrange bond investor meetings from Jan. 7, a person familiar with the matter said. The company hasn’t sold bonds in the U.S. currency before, according to data compiled by Bloomberg. The cost of insuring corporate and sovereign bonds from non-payment in Asia is set for its lowest close in two years, credit-default swap trader prices show.
Companies in Asia outside of Japan sold $1.25 billion of notes yesterday, the most since Nov. 28, according to data compiled by Bloomberg. Kaisa Group Holdings Ltd. (1638), headquartered in Shenzhen, received almost $10 billion in orders for its $500 million of 10.25 percent notes, a person familiar with that sale said. Country Garden Holdings Co. issued $750 million of 7.5 percent notes due 2023, Bloomberg data show.
“People are getting more comfortable putting money to work,” said Annisa Lee, a Hong Kong-based credit analyst at Nomura Holdings Inc. The U.S. high-yield market has seen some fund outflows and money is flowing into emerging markets, improving investor sentiment toward Asia credit, she said.
Speculative-grade bonds sold by companies in emerging Asia pay an average 561 basis points more than government debt as of Jan. 3, 156 basis points more than similarly-rated corporates globally, according to Bank of America Merrill Lynch indexes.
Hong Kong Broadband Network, which provides voice and data communications services in the city, hired JPMorgan Chase & Co., Standard Chartered Plc and UBS AG for its proposed sale of dollar bonds and will meet investors in Asia and Europe from Jan. 8, a person familiar with the matter said, asking not to be identified because the details are private. Champion REIT is holding meetings after establishing a $1 billion medium term notes program, another person familiar said.
Power Grid hired Barclays Plc, Royal Bank of Scotland Group Plc and Standard Chartered to arrange its investor meetings and a Reg S, unsecured dollar bond may follow, a person familiar with the matter said.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan decreased 2 basis points to 101.5 basis points as of 8:19 a.m. in Hong Kong, RBS prices show. The measure is set for its lowest close in two years and its first weekly decline since the five-day period ending Dec. 14, according to data provider CMA.
The Markit iTraxx Japan index dropped 10 basis points to 148 as of 9:16 a.m. in Tokyo, Citigroup Inc. prices show. That’s the biggest one-day decline since Sept. 7 and puts the index on track for its lowest close since March last year, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market. Markets in Japan have been closed since Dec. 28 due to national holidays.
The Markit iTraxx Australia index fell 2 basis points to 114 as of 11:17 a.m. in Sydney, according to Westpac Banking Corp. The index is on course for its lowest close in 17 months, 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.