Kookmin Markets Dollar Debt as Asian Yields Fall Near August LowRachel Evans
Kookmin Bank, a unit of Korea’s second-largest lender group, is marketing a sale of U.S. dollar-denominated bonds as yields on notes in the currency from borrowers in Asia fall near the lowest since August.
Kookmin plans to sell three-year securities at about 140 basis points more than the three-month London interbank offered rate as soon as today, according to a person familiar with the matter, who asked not to be identified because the terms aren’t set. A unit of China Taiping Insurance Group Co. plans to meet investors in Hong Kong and Singapore tomorrow to discuss a possible dollar sale, a separate person said.
Borrowers from Asia outside Japan pay an average 5.31 percent to sell debt in the U.S. currency, just 2 basis points more than a six-week low reached on Sept. 19, according to JPMorgan Chase & Co. indexes. The U.S. Federal Reserve’s decision last month not to slow bond purchases has helped reduce costs, with 10-year government-debt yields falling 6 basis points since the announcement on Sept. 18.
“The lower U.S. Treasury yield since the ‘no-taper’ announcement from the Fed a couple of weeks ago is probably the key driver for investment-grade issuance,” said Keith Chan, a Hong Kong-based credit analyst at HSBC Holdings Plc. “It seems like there will be more investment-grade issuance coming in the next two to three weeks in order to seize this market window.”
The cost of insuring Asia-Pacific corporate and sovereign bonds from default declined today, according to traders of credit-default swaps.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan slid 2 basis points to 147 basis points as of 8:34 a.m. in Hong Kong, Westpac Banking Corp. prices show. The gauge is set for its lowest close since Sept. 23, according to data provider CMA.
The Markit iTraxx Australia index fell about 2 basis points to 117 basis points as of 8:57 a.m. in Hong Kong, according to Australia & New Zealand Banking Group Ltd. The benchmark is on course for its lowest close since Sept. 19, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market. Sydney is observing a public holiday.
The Markit iTraxx Japan index dropped 0.5 to 93.3 as of 9:28 a.m. in Tokyo, Citigroup Inc. prices show. The measure is on track for its lowest close since Oct. 3, according to CMA.
Credit-default swap indexes are benchmarks for protecting 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.