Nonghyup and Evergrande Market Debt After Busiest Day in 2 WeeksTanya Angerer
South Korea’s Nonghyup Bank and Chinese developer Evergrande Real Estate Group Ltd. are marketing U.S. dollar-denominated bonds after Asia-Pacific’s busiest day of sales in two weeks.
The Seoul-based state-owned lender is offering five-year notes at a yield premium of about 170 basis points more than Treasuries, while Evergrande is marketing its similar-maturity debentures to yield about 8.75 percent, people familiar with the matters said. Issuance of U.S. currency notes in the region jumped to $2 billion yesterday, the most since $2.2 billion of sales on Oct. 10, Bloomberg-compiled data show.
Dollar borrowing costs in Asia fell to a four-month low of 5.04 percent yesterday, JPMorgan Chase & Co. indexes show, as bond returns climbed. Securities of issuers worldwide have gained 0.4 percent this year through Oct. 23, reversing earlier declines, Bank of America Merrill Lynch indexes show. The Federal Reserve delayed a pullback in its monthly asset purchases while emerging markets from Hungary to Chile have cut borrowing costs in the past two months.
“Some of Asia’s fund managers have started to see inflows and are sitting on loads of cash after the summer lull,” said Thomas Kwan, the head of fixed-income at Harvest Global Investments Ltd., which has assets under management of about $6 billion. “That’s why we’re seeing very strong buying now. The liquidity will drive the market if nothing else.”
China Overseas Land & Investment Ltd., a Hong Kong-based property developer, sold $1.5 billion of debt yesterday split equally into five-, 10- and 30-year notes, according to data compiled by Bloomberg. HDFC Bank Ltd., India’s largest by market value, borrowed $500 million via an issue of bonds due 2016 and sold at a 255 basis-point spread over Treasuries.
Nonghyup Bank sold dollar bonds in September 2012, raising $500 million via 2.25 percent notes which mature in 2017, according to data compiled by Bloomberg. Those bonds are now yielding 2.3 percent. Evergrande, whose weighted average fixed-coupon is 10.46 percent, last sold dollar debt in 2010.
The cost of insuring corporate and sovereign bonds against non-payment in Asia-Pacific outside of Japan rose, according to traders of credit-default swaps.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan increased 2 basis points to 134 basis points as of 8:18 a.m. in Singapore, Australia & New Zealand Banking Group Ltd. prices show. The benchmark is on track for its highest close since Oct. 22, according to data provider CMA.
The Markit iTraxx Australia index advanced 2 basis points to 106 as of 11:47 a.m. in Sydney, Westpac Banking Corp. prices show. The gauge is headed for its second consecutive increase and set to pare its drop this month to 19.2 basis points, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.
The Markit iTraxx Japan index was little changed at 86 basis points as of 9:14 a.m. in Tokyo, according to Citigroup Inc. prices. The measure, which has ranged from 74 to 148.1 this year, is poised to drop 11.3 basis points this month, 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.