First-Half Rush Leaves Companies Sated as Pertamina Sells Debt

PT Pertamina and Nan Fung International Holding Ltd. were the only companies in Asia to sell dollar-denominated bonds this week even as borrowing costs hold near an 11-month low.

Indonesia’s state-owned oil company raised $1.5 billion offering 30-year 6.45 percent notes yesterday. Developer Nan Fung sold $200 million of 4.875 percent securities due 2024 on the same day, slowing issuance to the least in eight weeks, according to data compiled by Bloomberg.

Many companies have raised the debt they needed to this year with U.S. currency bond sales in the region since Dec. 31 totaling $83.3 billion, already two-thirds of 2013’s record volume. Credit risk in Asia excluding Japan is poised to fall for a fourth consecutive week as yields average 4.8241 percent, close to the lowest since June last year, according to JPMorgan Chase & Co. indexes.

“The furious pace of year-to-date supply is unlikely to continue into the second half,” said Mark Reade, a Hong Kong-based analyst at Mizuho Securities Asia Ltd. “Most issuers’ 2014 funding plans were likely skewed toward” the first six months of the year, he said.

Investors in the U.S. bought 48 percent of Pertamina’s notes while Asian money managers took 25 percent, a person familiar with the matter said today, asking not to be identified because the details are private.

Thai Risk

Nan Fung, led by Anthony Leung, Hong Kong’s former financial secretary, sold its notes at a 240 basis-point spread over Treasuries. The debentures were trading at a 229.8 basis-point premium today, BNP Paribas SA prices on Bloomberg show.

The cost of insuring corporate and sovereign bonds against non-payment in the Asia-Pacific region outside Japan fell today. Credit risk in Thailand rose as the country’s military seized control following a six-month political stalemate.

Swaps insuring Thai government debt against default were quoted two basis points higher at 132 basis points as of 9:35 a.m. in Hong Kong, according to Standard Chartered Plc. The swaps rose six basis points yesterday, the biggest one-day jump since Feb. 24, according to data provider CMA.

“The market feels fine here,” said Kris Uahwatanasakul, a credit trader at Standard Chartered in Singapore. “Cash bonds marked three to four basis points wider but there’s no panic. We’re seeing some accounts actually looking for bonds at a better yield level.”

Australia, Japan

The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan decreased one basis point to 116 basis points as of 8:21 a.m. in Hong Kong, Australia & New Zealand Banking Group Ltd. prices show. The gauge is set for its lowest close since May 14, according to CMA.

The Markit iTraxx Australia index dropped 0.5 of a basis point to 90 as of 10:21 a.m. in Sydney, according to ANZ. The benchmark is poised to decline 1.665 basis points this week, falling for a sixth straight period, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.

The Markit iTraxx Japan index slid 0.5 of a basis point to 82.25 basis points as of 9:20 a.m. in Tokyo, Citigroup Inc. prices show. The measure, declining for a second day, is set for its lowest close since March 19.

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.

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