Marubeni Plans First Dollar Bonds Since 2006, Debt Risk Rises
Marubeni Corp. (8002), Japan’s biggest trader of agricultural commodities, is planning its first dollar-denominated bonds since 2006 as issuance in the Asia- Pacific region approaches a three-week high. Debt risk rose.
The company hired Citigroup Inc., Goldman Sachs Group Inc. and JPMorgan Chase & Co. to arrange fixed-income meetings from March 5, said a person familiar with the matter. Marubeni’s unit Mirant JPSCO Finance Ltd. last sold U.S. currency notes in June 2006. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan rose 1 basis point to 108.5 basis points as of 8:26 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show.
Dollar bond offerings in the Asia-Pacific region reached $4.35 billion this week, nearing the highest since the five-day period to Feb. 1, according to data compiled by Bloomberg. Marubeni, rated two levels above junk by Moody’s Investors Service Inc. and Standard & Poor’s, is buying the U.S grain trader Gavilon Group LLC for $5.6 billion as incoming Chief Executive Officer Fumiya Kokubu targets a 50 percent increase in annual profit.
“The climate in the market for investment-grade issuers is getting very good, even for BBB ones like Marubeni,” Toshiyasu Ohashi, chief credit analyst for Daiwa Securities Co., said in a telephone interview from Tokyo today. “It would have been difficult for companies with Marubeni’s credit ratings to issue bonds overseas until recently.”
The cost to insure Marubeni’s debt against non-payment dropped 23 basis points this year to 121 basis points yesterday, reaching the lowest since May 2011 on Feb. 6, according to data- provider CMA. The decline is less than the 34 basis point drop for the benchmark Markit iTraxx Japan index during the same period.
Daiwa Securities Group Inc. (8601), Japan’s second-biggest brokerage, was the last similarly-rated Japanese borrower to issue dollar debt, with a sale of $67 million of notes on Nov. 15, data compiled by Bloomberg show. The bond matures in December 2017 and pays a coupon of 1.4 percent.
Moody’s rates Marubeni at Baa2 and S&P’s ranks it BBB, Bloomberg data show.
The Markit iTraxx Asia index, which has ranged from 102.8 to 120.3 since Dec. 31, is poised to decline for a fourth- consecutive week, according to data provider CMA.
The Markit iTraxx Australia index added 0.5 basis point to 115 as of 10:38 a.m. in Sydney, Westpac Banking Corp. (WBC) prices show. The benchmark is set to increase for the first time in three days, 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 also rose 0.5 basis point to 125 as of 9:13 a.m. in Tokyo, according to Deutsche Bank AG prices. The measure, which started the year at 148.1, dropped for a fifth straight month in February, CMA prices show.
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.