China’s Sinochem plans to dump dollar bondsSinochem Group, China’s biggest supplier of chemical products, is planning a sale of U.S. dollar-denominated bonds after yields in the currency fell for a third week. The cost to insure notes against nonpayment in the region declined, according to credit-default swap traders.
Beijing-based Sinochem hired five banks to help arrange a series of fixed-income investor meetings in Hong Kong and Singapore from today, a person familiar with the matter said, asking not to be identified because the details are private. Chinese department store owner Parkson Retail Group will also meet bond investors from today while Union Bank of India is marketing 5.5-year U.S. currency notes at a spread of about 315 basis points, people familiar with the matter said.
Average dollar bond yields in Asia fell for a third week to 4.23 percent Friday, capping the longest consecutive string of weekly declines in about six months, JPMorgan Chase indexes show. With the Federal Open Market Committee pledging to keep interest rates near zero as long as unemployment in the U.S. remains above 6.5 percent and inflation isn’t forecast to exceed 2.5 percent, investors are searching for yields elsewhere, according to Credit Agricole CIB.
“There’s a growing list of corporates eager to tap cheap U.S. dollar funding combined with investors’ continued hunt for yield,” said Mark Reade, a Hong Kong-based credit desk analyst at the French bank.
Issuance in the region totaled $4.9 billion last week, versus a record $8.3 billion in the period through April 12, Bloomberg data show. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan is poised to close at its lowest level in a month, according to prices from Westpac Banking and data provider CMA.
Sinochem, which plans to sell its securities via unit Sinochem Global Capital hired Citigroup, Goldman Sachs, HSBC, Morgan Stanley and UBS AG to manage the possible perpetual note issue, the person familiar with the matter said.
Daegu Bank, a Korean lender, is also planning dollar bonds, marketing five-year notes at a spread of about 175 basis points more than similar-maturity Treasuries, another person familiar with the matter said.
Parkson Retail has hired DBS Group Holdings, JPMorgan and Nomura Holdings to help arrange its fixed-income meetings. Moody’s Investors Service assigned a provisional Ba1 rating to the Reg S bonds the company may subsequently offer.
The Markit iTraxx Asia index fell 1 basis point to 113 basis points as of 8:24 a.m. in Hong Kong while the Markit iTraxx Australia index decreased 1.5 basis points to 114.25 as of 10:12 a.m. in Sydney, according to Westpac. The latter is set for its first decline since April 11, according to CMA.
The Markit iTraxx Japan index fell 1 basis point to 92 basis points as of 9:24 a.m. in Tokyo, Citigroup prices show. The index, which has ranged from 90.5 to 148.1 this year, is poised for its lowest close since April 15, according to CMA, which is owned by McGraw-Hill and compiles prices quoted by dealers in the privately negotiated 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. Bloomberg
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