China Railway Construction Considers Dollar Bond SaleKristine Aquino
China Railway Construction Corp. and China International Marine Containers Group Co. are considering U.S. dollar-denominated bonds as borrowing costs in Asia outside Japan fell to a two-month low.
China Railway Construction, a Beijing-based track builder, hired six lenders to help arrange a series of fixed-income investors meetings in Hong Kong, Singapore and London from May 6, a person familiar with the matter said. China International Marine Containers and Poly Property Group Co. also selected banks for possible offerings in the U.S. currency, according to separate people familiar with the matter, who asked not to be identified because the details are private.
Average yields for companies in the region dropped to 4.66 percent yesterday, the lowest since Feb. 27, according to JPMorgan Chase & Co. indexes. The decline comes after the Federal Reserve kept the pace of asset purchases at a meeting this week and Treasury yields fell to their lowest levels this year.
“Borrowing costs have declined as U.S. Treasury yields have come down substantially over the past month,” said Krishna Hegde, the Singapore-based head of Asia credit research at Barclays Plc. “Given the low-yield environment, we find investors continue to migrate down the risk spectrum and corporate issuers are seeing the benefits.”
Companies raised $4.8 billion in the five days through today, a two-week high, according to data compiled by Bloomberg. Cnooc Ltd. led issuance this week with a $4 billion sale, the biggest U.S. currency offering from Asia excluding Japan in more than nine years, the data show.
China Railway Construction hired ABC International Bank Plc, BNP Paribas SA, Citigroup Inc., CITIC Securities International Co., HSBC Holdings Plc and Morgan Stanley for a possible Reg S security sale after investor meetings beginning next week, a person familiar with the matter said.
China International Marine Containers, the world’s biggest container maker, selected seven lenders for a possible U.S. dollar Reg S offering via its China International Marine Containers Hong Kong Ltd. unit, a separate person said. Chinese developer Poly Property is also considering a dollar note sale and will meet with bond investors in Asia from May 6.
Singapore’s BOC Aviation Pte sold $150 million more of its dollar bonds due May 2023 at 263 basis points more than similar maturity Treasuries, a separate person familiar with the matter said.
The cost of insuring corporate and sovereign bonds in the Asia-Pacific region against non-payment declined today, according to traders of credit-default swaps.
The Markit iTraxx Australia index tumbled 5 basis points to 100.5 basis points as of 9:14 a.m. in Sydney, Westpac Banking Corp. prices show. The gauge is set for its biggest one-day drop since Feb. 22 and poised for its lowest close since January 2011, according to Westpac and data provider CMA.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 3 basis points to 105 as of 9:01 a.m. in Singapore, Australia & New Zealand Banking Group Ltd. prices show. The benchmark is set to fall 5.7 this week, according to ANZ and CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.
Markets in Japan are closed today for a public holiday.
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.