ANZ Offers First Dollar Debt in Four Days as Bond Risk Declines
Australia & New Zealand Banking Group Ltd. is marketing a sale of U.S. dollar-denominated bonds, ending a three-day pause in Asia-Pacific issuance in the currency. Bond risk fell.
ANZ, Australia’s third-largest lender by market value, plans to sell as much as $750 million of three-year notes as soon as today, a person familiar with the matter said, asking not to be identified because terms aren’t set. The bank is the first borrower from the region to sell dollar debt since Global A&T Electronics Ltd., Westpac Banking Corp. and Hainan Airlines Co. issued notes on Jan. 31, data compiled by Bloomberg show.
Offerings from Asia have slowed after a record January as Lunar New Year holidays approach and a Treasuries sell-off pushes up yields. Average U.S. currency premiums for the region’s non-investment grade borrowers surged to 396 basis points yesterday, the most in five months, according to HSBC Holdings Plc indexes.
“The recent deluge of high-yield new issues are the weak spot in the market,” said Owen Gallimore, a Singapore-based credit analyst at ANZ. “As rates move quickly, it will be difficult for any but the best primary deals to issue immediately after the Chinese New Year holiday.”
The cost of insuring corporate and sovereign bonds in Asia is on track to close at the lowest level since the beginning of the month after rising four basis points this year, according to traders of credit-default swaps. Yields on 10-year U.S. government debt increased close to the highest level since April yesterday. Treasuries are often used as a pricing benchmark on Asian deals in the currency.
The World Bank’s International Bank for Reconstruction & Development, a top-rated supranational borrower, plans to sell three- and 10-year bonds, according to a person familiar with the matter.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan declined two basis points to 116.5 basis points as of 8:39 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge is set for its lowest close since Feb. 1, according to data provider CMA.
The Markit iTraxx Australia index decreased three basis points to 119 as of 11:39 a.m. in Sydney, according to Westpac prices. The benchmark has fallen 8.5 basis points so far this year, after a 53 basis-point drop in 2012, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.
The Markit iTraxx Japan index fell two basis points to 127 basis points as of 9:39 a.m. in Tokyo, according to Citigroup Inc. prices.
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.
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