Dollar Bonds Pulled by Lippo and Wanda Units on Rising Asia RiskRachel Evans
Property units of Dalian Wanda Group Corp. and Lippo Ltd. have postponed dollar-denominated bond sales amid rising perceptions of credit risk in Asia ahead of a leadership meeting in China and as the U.S. recovery sputters.
Dalian Wanda, founded by China’s richest man Wang Jianlin, shelved plans to sell five-year bonds at 325 basis points more than Treasuries via unit Wanda Properties Overseas Ltd., a person familiar with the matter said today, asking not to be identified because the details are private. The company may consider an offering in the future, the person said. PT Metropolis Propertindo Utama, owned by Lippo, also postponed a proposed offering, a separate person said.
The cost of insuring corporate and sovereign bonds in Asia against non-payment rose today, with a gauge of risk headed for its biggest weekly increase in six, according to traders of credit-default swaps. China’s Communist Party leaders begin a four-day policy meeting tomorrow. U.S. reports are expected to show growth in employment and consumer spending is slowing.
“The market has been very volatile this week and the recent tone is cautious,” said Louisa Lam, a Hong Kong-based analyst at HSBC Holdings Plc. “Issuers may like to wait a bit to see how the market’s going to be. With results from U.S. non-farm payrolls due today, I think the market just needs some time to digest what happens.”
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan climbed by 1 basis point to 138 basis points as of 8:18 a.m. in Hong Kong, Australia & New Zealand Banking Group Ltd. prices show. The gauge is set for a 5 basis-point increase over the past five days and is poised for its biggest weekly gain since the period ended Sept. 27, according to data provider CMA.
Liu Mingsheng, a spokesman for Dalian Wanda Group, the parent of Dalian Wanda Commercial Properties Co. which was to provide a keepwell deed to support the deal, couldn’t immediately be reached when called on his mobile phone today.
Metropolis Propertindo had planned to sell five-year bonds at about 11 percent, a person familiar with the matter said earlier this week. No one at the company was immediately available to comment on any sale delay today.
Non-farm payrolls are expected to rise by 120,000 workers, down from a 148,000 increase in September, as the world’s largest-economy loses growth momentum, a survey of 91 analysts for Bloomberg News shows, ahead of official data due later today. Personal spending expanded by 0.2 percent in September, economists predict, lower than the 0.3 percent increase the month before.
China’s Communist Party plenum from Nov. 9-12 in Beijing may represent a watershed moment for the country’s economic modernization, according to the state-controlled Xinhua news service. Further reforms may be unveiled for the financial system as well as measures to assist migration to cities and lessen the impact of development on the environment.
The Markit iTraxx Japan index increased 0.5 of a basis point to 93.75 as of 9:19 a.m. in Tokyo, according to Citigroup Inc. prices. The measure is on track to record its first weekly decline since the five days ended Oct. 18, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.
The Markit iTraxx Australia index was little changed at 104 basis points as of 11:20 a.m. in Sydney, according to Westpac Banking Corp. prices. The benchmark has fallen for the past two days after peaking at 106 basis points on Nov. 5, the highest since Oct. 28, 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.