Asia Credit Risk Heading for Two-Week Low Brings Out Bond SalesRachel Evans and Tanya Angerer
China Taiping Insurance Group Co., Greenland Hong Kong Holdings Ltd. and India’s Canara Bank are marketing U.S. dollar-denominated bonds as the cost to insure notes in Asia against default falls to the lowest in two weeks.
China Taiping, a state-owned insurer selling its debentures via unit China Taiping New Horizon Ltd., is offering 10-year notes at a spread of about 340 basis points more than similar-maturity Treasuries, a person familiar with the matter said, asking not to be identified because the details are private. Greenland Hong Kong, a Chinese developer, is marketing three-year bonds to yield about 5 percent while Canara Bank plans to sell five-year securities at an about 400 basis-point spread, other people familiar with those matters said.
Bond risk in the region outside Japan is poised to close at its lowest level since Sept. 26, traders of credit-default swaps said. U.S. President Barack Obama picked Janet Yellen to succeed Ben S. Bernanke as head of the Federal Reserve yesterday. Yellen, now the Fed’s vice chairman, has supported the central bank’s bond-buying program and was a driving force behind a new strategy adopted last year, committing the central bank to goals on inflation and unemployment.
“Because Yellen was Bernanke’s right hand woman, her appointment reinstates the status quo,” said Pang Cheng Duan, the head of fixed-income at Manulife Asset Management (Singapore) Pte, whose parent company manages $247 billion globally. “It gives the market some comfort, as the Fed’s big picture aims will stay the same. With Asian corporates still remaining fundamentally strong, issuance will increase.”
Dollar bonds in Asia rose 0.1 percent yesterday, the most this week, JPMorgan Chase & Co. indexes show. The debt has gained 1.8 percent this half as bond sales revived following news last month the Fed will maintain its asset purchases at least for the time being.
Greenland Hong Kong, previously known as SPG Land Holdings Ltd., hired BOC International Holdings Ltd., Citigroup Inc., Deutsche Bank AG, Goldman Sachs Group Inc., HSBC Holdings Plc, JPMorgan and Morgan Stanley to help manage its sale, which should complete today, the person familiar with the matter said.
The company sold dollar bonds in April 2011, according to data compiled by Bloomberg. Those $200 million of 13.5 percent notes due 2016 were yielding 8.53 percent as of yesterday in Hong Kong, Bloomberg-compiled prices show.
China Taiping, which has some $2.1 billion of bonds and loans due before 2029, sold notes denominated in the U.S. currency in September, the data show.
Separately, Winsway Coking Coal Holdings Ltd., a Chinese importer of coal for steelmakers, is buying back some of its dollar debt for as little as a third of its issue price after bondholders agreed to a sweetened tender offer.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan fell 1 basis point to 149 basis points as of 9:01 a.m. in Hong Kong, Australia & New Zealand Banking Group Ltd. prices show.
The Markit iTraxx Japan index lost 0.5 of a basis point to 95.8 as of 9:59 a.m. in Tokyo, Citigroup Inc. prices show. The index is headed for a 1.9 basis-point rise this week, according to data provider CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
The Markit iTraxx Australia index gained 1 basis point to 121.5 basis points as of 11:51 a.m. in Sydney, according to National Australia Bank Ltd. The index is on course to rise 2.5 basis points this week, CMA data show.
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.