[TOKYO] More Asian borrowers are considering bond offerings, extending a stretch of sales that has already jumped to the most since 2021 at US$306 billion-equivalent across US dollars and euros this year.
Japan’s Fukoku Mutual Life Insurance and Jera, a power producer, are both kicking off discussions on potential US dollar note deals on Monday (Aug 25), according to people with knowledge of the matter. Korea National Oil is also set to conduct investor meetings and calls this week, while Japan-based trading firm Mitsui hired banks for a potential offering.
The latest moves mark early signs of a global pickup in issuance, as companies aim to lock in some of the tightest credit spreads in decades and as markets enter a typically busy period following a summer lull.
Signals from Federal Reserve chair Jerome Powell that the US may cut rates as soon as September are fueling investor risk appetite and lowering Treasury yields, which serve as benchmarks for pricing most corporate US dollar debt.
“Corporate balance sheets are broadly in decent shape, particularly compared to sovereign balance sheets,” Omar Slim, co-head of Asia fixed income at PineBridge Investments, said. New deals are “a welcome development from our perspective because the market needs some issuance and the demand is there.”
Spreads on Asian investment-grade US dollar bonds tightened to a record low of 60 basis points earlier this month, a Bloomberg index shows. Prices from traders on Monday showed spreads tightening about two basis points, which would bring yield premiums back around record levels.
Issuance in US dollars and euros by Asia-Pacific borrowers totals about US$306 billion so far this year, or about a 47 per cent jump year-on-year, according to Bloomberg-compiled data, excluding notes with maturities shorter than 18 months.
From late August through September 2024, regional issuers sold more than US$50 billion in dollar and euro notes combined, the data show. BLOOMBERG
