Asia-Pacific Bond Sales Near One-Year High as China XD OffersTanya Angerer
China XD Plastics Co. is marketing a U.S. dollar-denominated bond as offerings in the Asia-Pacific region near a one-year high.
The Nasdaq-listed developer and manufacturer of modified plastics is selling a five-year note to yield about 12 percent, according to a person familiar with the matter, who asked not to be identified because the matter is private. Regional issuance is at $30.1 billion this month already, nearing September’s $30.8 billion, which was the highest since January 2013, according to data compiled by Bloomberg.
Asia-Pacific borrowers are seeking debt in the U.S. currency as the Federal Reserve begins stimulus cuts that investors speculate will push yields up further. Borrowing costs in dollars in Asia rose by 125 basis points last year, the most since 2008, according to JPMorgan Chase & Co. indexes.
“Everyone is rushing to the market to lock in funding, which is a trend we saw in the first quarter of last year too,” said Raymond Chia, the Singapore-based head of credit research for Asia fixed-income at Schroder Investment Management Ltd. “ However this time it is really driven by the view of rising U.S. Treasury yields.”
Wanda Properties International Co., part of the Dalian Wanda Group owned by Chinese billionaire Wang Jianlin, sold $600 million of 10-year debentures at a spread of 455 basis points, or 4.55 percentage points, more than Treasuries on Jan. 23.
The cost of insuring corporate and sovereign bonds in Asia rose to the highest level in more than three months, according to traders of credit-default swaps.
The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan increased by 5 basis points to 146 basis points as of 8:19 a.m. in Hong Kong, Australia & New Zealand Banking Group Ltd. prices show. The gauge is poised to close at the highest level since Oct. 10, CMA data show.
The Markit iTraxx Japan index rose 2.75 basis points to 84 basis points, according to Citigroup prices as of 9:19 a.m. in Tokyo. The measure was last at a higher level on Nov. 15, according to CMA data.
The Markit iTraxx Australia index climbed 4 basis points to 106 as of 11:18 a.m. in Sydney, Westpac Banking Corp. prices show. The benchmark is set for its biggest increase since Sept. 30 and the highest level since Dec. 6, 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.