Asia Dollar Bond Sales Beat Record as Risk Lowest in Three YearsRachel Evans
Dollar-bond sales by Asian issuers in 2013 have surpassed all previous records as risk perceptions averaged the lowest in three years.
Borrowers from the region outside Japan raised $123.5 billion of debt in the U.S. currency since Dec. 31, exceeding last year’s all-time high of $121.4 billion, data compiled by Bloomberg show. The cost of insuring corporate and sovereign bonds from non-payment in the region averaged 127.5 basis points in 2013, the least since 2010, according to traders of credit default swaps.
India’s ICICI Bank Ltd. led $1.95 billion of sales this week, the busiest in a month, as companies in Asia shrugged off U.S. Federal Reserve minutes suggesting the central bank may start winding back stimulus “in coming months.” Investors pulled $325 million out of emerging Asia’s debt in the week to Nov. 13, Australia & New Zealand Banking Group Ltd. wrote in a note last week, citing EPFR Global data.
“This is a multiyear trend,” said Kaushik Rudra, the Singapore-based global head of credit research at Standard Chartered Plc. “Tapering is clearly an issue for the market and that will keep a lot of investors on the sidelines and limit the secondary flow but investors still have a fair amount of cash.”
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan was little changed at 132 basis points as of 8:41 a.m. in Hong Kong, ANZ prices show. The benchmark is poised for a 1.7 basis-point drop this week, according to data provider CMA.
China Construction Bank Asia Corp. hired banks to arrange a series of investor meetings from Nov. 25, a person familiar with the matter said today, asking not to be identified because the details are private.
ICICI, India’s second-lender by assets, raised $750 million via sale of 4.8 percent May 2019 bonds on Nov. 18, data compiled by Bloomberg show. Korea East-West Power Co., part of South Korea’s largest electricity generator, and China Mengniu Dairy Co., the nation’s largest producer of milk and ice creams, both sold $500 million of five-year bonds yesterday.
The Markit iTraxx Australia index retreated 1.5 basis points to 104 basis points as of 11:46 a.m. in Sydney, according to Citigroup Inc. The measure, which is falling for a second day, is poised for a 1.1 basis-point rise this week, CMA data show.
The Markit iTraxx Japan index declined 1 basis point to 80 as of 9:40 a.m. in Tokyo, Deutsche Bank AG prices show. The gauge is falling for a third consecutive day and is on track for a 5 basis-point decrease this week, which would be the most since the five days ended Nov. 15, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market.
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.