Asia Dollar Bonds See Busiest Week in 3 Months as Hopson SellsTanya Angerer
Companies from Hong Kong to the Philippines and Australia are seeking to sell dollar-denominated debt, adding to what is already the busiest week for Asia-Pacific offerings in almost three months. Bond risk rose.
Hopson Development Holdings Ltd. is offering five-year notes yielding about 10.5 percent, while Hysan Development Co., another Hong Kong-based developer, is seeking to issue 10-year debt at about 170 basis points more than Treasuries, said people familiar with the deals. International Container Terminal Services Inc., a Manila-based port operator, is marketing 10-year securities at 5.25 percent, according to another person. Commonwealth Bank of Australia plans to sell covered notes.
Borrowers are locking in funding as investor appetite drives down borrowing costs, with yield premiums on dollar bonds from Asia tumbling to a 20-month low on Jan. 7, according to JPMorgan Chase & Co. indexes. The deals announced today will add to $6.2 billion of completed offerings from Asia-Pacific borrowers this week, already the most since issuers priced $8.9 billion of notes in the five days ended Oct. 12, data compiled by Bloomberg show.
“The deal pipeline is thick and fast as we expected,” said Owen Gallimore, a fixed-income analyst at Australia & New Zealand Banking Group Ltd. in Singapore. “High-yield issuers are keen to tap strong investor demand at these tight yields, and high-grade issuers’ plans have been given a sense of urgency with Treasury yields increasing quickly.”
Yields on benchmark U.S. 10-year Treasuries touched 1.97 percent on Jan. 4, the highest since April, after the world’s largest economy avoided the so-called fiscal cliff and Federal Reserve minutes showed some policy makers had urged for curbs on asset purchases before the end of 2013.
Hopson’s proposed notes are rated Caa1 by Moody’s Investors Service and the equivalent CCC+ by Standard & Poor’s. The company paid in January 2011 an 11.75 percent coupon when it sold $300 million of five-year bonds, data compiled by Bloomberg show.
Westpac Banking Corp. led issuance from the Asia-Pacific region this week, raising $2.25 billion, followed by Toyota Motor Credit Corp. and Shimao Property Holdings Ltd., according to the data.
Indo Energy Finance II B.V., a unit of PT Indika Energy Tbk, hired Citigroup Inc., Standard Chartered Plc and UBS AG for a proposed dollar bond sale, three people familiar with the matter said today.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan gained 1 basis point to 104.5 as of 8:18 a.m. in Hong Kong, Royal Bank of Scotland Group Plc prices show. The gauge is set for its highest close since Jan. 3, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.
The Markit iTraxx Australia index rose 1 basis point to 113 basis points as of 11:08 a.m. in Sydney, according to Australia & New Zealand Banking Group Ltd. The index is on course for its highest close since Jan. 4, according to data provider CMA.
The Markit iTraxx Japan index climbed 1 1/2 basis points to 143 basis points as of 9:09 a.m. in Tokyo, Citigroup Inc. prices show. The index is on track for its first increase this year, 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.