Texhong Plans Bond Sale, Japan Debt Risk Falls to Pre-Quake LowTanya Angerer
Texhong Textile Group Ltd. is planning to sell dollar-denominated bonds. Corporate debt risk in Japan dropped to its lowest level in more than two years as the central bank expanded stimulus.
The Shanghai-based fabric producer hired Deutsche Bank AG, JPMorgan Chase & Co. and Standard Chartered Plc ahead of investor meetings today, a person familiar with the matter said. The Markit iTraxx Japan index tumbled 11.5 basis points to 94.5 basis points, bringing the gauge to its least since before the March 11, 2011 earthquake that devastated the nation’s northeast, prices from traders and data provider CMA show.
Bank of Ceylon, South Korea’s Daegu Bank Ltd. and a unit of Yingde Gases Group Co. are among companies planning to sell dollar notes, according to people familiar with the deals and a report from Fitch Ratings Ltd. Issuers from Asia outside of Japan last sold U.S. currency bonds on March 27 after $5.7 billion of offerings last week, according to data compiled by Bloomberg. Markets in Hong Kong were shut April 1 and yesterday.
“The pipeline for deals has been building up tremendously,” said Brayan Lai, an analyst in emerging-market credit trading at Jefferies Group Inc. “The lull this week was expected with Hong Kong on holiday. Liquidity in the secondary market has been abysmal.”
The Markit iTraxx Japan index is poised for its lowest close since Nov. 26, 2010 and its biggest one-day drop since Sept. 7, according to Citigroup Inc. prices as of 12:24 p.m. in Tokyo and CMA.
Citic Pacific Ltd.’s $500 million of bonds sold on March 27 were trading at 102.2 cents on the dollar at 2:18 p.m. in Hong Kong, according to Bloomberg prices.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan slid 1.5 basis points to 120 basis points as of 2:08 p.m., Royal Bank of Scotland Group Plc prices show. The measure has ranged from 100.5 to 122.3 since Dec. 31, according to CMA.
The Markit iTraxx Australia index fell 1 basis point to 119 as of 10:36 a.m. in Sydney, according to Westpac Banking Corp. prices. The benchmark has ranged from 102.3 basis points to 127.5 this year, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.
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.