India’s HDFC Bank Plans Dollar Bond Sale as CIFI Cancels IssueTanya Angerer and Anoop Agrawal
HDFC Bank Ltd., India’s largest lender by market value, plans dollar-denominated debt as Asia-Pacific sales rose to a three-week high. CIFI Holdings Group Co., a Hong Kong-listed developer, canceled its note issue.
HDFC hired Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Standard Chartered Plc to arrange a series of fixed-income meetings from Feb. 25, a person familiar with the matter said today. CIFI decided not to proceed with its sale of five-year dollar bonds due to unfavorable market conditions, four people familiar with the matter said, asking not to be identified because the details are private.
Dollar bond sales in the region reached $4.4 billion this week, more than two times the $1.9 billion sold in the last five business days, data compiled by Bloomberg show. Yield premiums on debt in the U.S. currency were 259 basis points more than Treasuries Feb. 21, near a 20-month low of 245 basis-points reached Jan. 7, JPMorgan indexes show.
“I think investors are cautiously bullish and are looking for investment-grade paper,” Clifford Lee, the head of fixed-income at DBS Group Holdings Ltd., said by telephone. “There will be strong demand for paper if the issue is in a segment where there’s liquidity,” and a company’s financials are “fundamentally strong,” he said.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan was little changed at 108.5 as of 2:22 p.m. in Hong Kong, according to Credit Agricole SA prices.
CIFI, which is based in Shanghai and develops homes and offices in China, scrapped its bonds as the nation’s new home prices rose in 53 of the 70 cities the government tracks in January. Premier Wen Jiabao told cities that have had “excessively fast” price gains to “promptly” impose home-purchase restrictions if they’ve not done so already, according to a Feb. 20 statement after a State Council meeting he headed.
The developer had been considering pricing five-year bonds in the low-to-mid 11 percent range, according to another person familiar with the matter and data compiled by Bloomberg.
“CIFI’s bonds suffered from a mismatch in terms of the company’s expectations on pricing and what the market was willing to pay,” said Brayan Lai, an analyst in emerging-market credit trading at Jefferies Group Inc. in Singapore. “Headline risks in the real estate sector probably mean that the market needs to see a price premium.”
The Markit iTraxx Japan index decreased 0.25 of a basis point to 125 as of 15:01 a.m. in Tokyo, Citigroup Inc. prices show. The benchmark is headed for its first weekly rise since the week ended Dec. 7, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
The Markit iTraxx Australia index advanced 2 basis points to 116 basis points as of 11:04 a.m. in Sydney, according to National Australia Bank Ltd. prices. The benchmark is on track to increase 2.3 basis points this week and set for its biggest weekly rise since the five-day period ended Nov. 16, 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. 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.